Source: www.williams.edu
Topic: Stock Investment
Sort Desciption: capital stock but does not describe the dynamics of the investment process. ... investment to stock price changes than in previous work (e.g., the estimated ...
Content Inside: What Can We Learn About the Sensitivity of Investment to Stock Prices with a Better Measure of Tobin’s q? William M. Gentry Williams College and NBER Christopher J. Mayer The Wharton School, University of Pennsylvania July 15, 2003 We thank Gary Engelhardt, Mark Garmaise, Joao Gomes, Joe Gyourko, Charlie Himmelberg, Charles Jones, Augustin Landier, Andrew Metrick, Antoinette Schoar, Todd Sinai, Nick Souleles, Nancy Wallace, Toni Whited, and seminar participants at the AFA meetings, Berkeley- MIT-Texas Real Estate Conference, Columbia University, the NBER, University of Colorado, University of North Carolina, Williams, and The Wharton School for helpful comments. We are especially grateful to Jon Fosheim and Green Street Advisors for providing crucial data and to Dou-Yan Yang and Dimo Pramatarov for excellent research assistance. The Paul Milstein Center for Real Estate at Columbia Business School and the Zell-Lurie Real Estate Center at the Wharton School provided financial support. William M. Gentry; Department of Economics, Fernald House, Williams College, Williamstown, MA 01267; (413) 597- 4257; william.m.gentry@williams.edu. Christopher J. Mayer, The Wharton School, University of Pennsylvania, 314 Lauder-Fischer Hall, 256 South 37 th Street, Philadelphia, PA 19104; (215) 573-5009 (phone), (215) 573-2220 (fax); mayerc@wharton.upenn.edu. What Can We Learn About the Sensitivity of Investment to Stock Prices with a Better Measure of Tobin’s q? William M. Gentry Williams College and NBER Christopher J. Mayer The Wharton School, University of Pennsylvania July 15, 2003 Abstract This paper examines the responsiveness of investment to q (i.e., the ratio of a firm’s market value to the replacement cost of its assets) using data on a unique type of firm: Real Estate Investment Trusts (REITs). For REITs, we have high quality estimates of the net asset value of the firm that we use to create relatively accurate measures of Tobin’s q. In additi ...
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