Non-Linear Response of Firm Investment to q: Evidence from Greek Listed Firms
Authors: Kallandranis, Christos 
Issue Date: 1-Jan-2019
Journal: Risk Governance and Control: Financial Markets & Institutions 
Volume: 9
Issue: 1
Keywords: Investment, Non-linearities, Panel data, Tobin’s q
Abstract: 
A dynamic-panel model is applied in order to empirically investigate the relationship between business fixed investment and Tobin’s q for the firms listed in the Athens Stock Exchange (ASE). In particular, we search for non-linearities in the underlying relationship between investment and fundamentals, consistent with the presence of multiple regimes. The empirical results support a discontinuity identifying two-regimes: (a) wherein the first (for values of q below a certain threshold) investment is inelastic to q, while in the second it exhibits a positive relationship, and b) a further non-linearity expressed in a concavity of the investment- q relationship implying that for the segment where investment reacts to fundamentals positively, it does so at a decreasing rate evidence which is consistent with the presence of non-convexities in adjustment costs.
ISSN: 2077-4303
DOI: 10.22495/rgcv9i1p5
URI: https://uniwacris.uniwa.gr/handle/3000/1350
Type: Article
Department: Department of Accounting and Finance 
School: School of Administrative, Economics and Social Sciences 
Affiliation: University of West Attica (UNIWA) 
Appears in Collections:Articles / Άρθρα

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