We propose a tax-adjusted q model with physical and intangible assets and estimate it with a self-collected comprehensive database of intangible assets. The presence of intangibles changes the accounting and economic measures of q. We show that when tax changes are temporary, the q model can be estimated by adjusting for the firmas intangible stock and intangible intensity. We estimate our model using temporary investment tax incentive policies in the United States in the early 2000s. When the q-model accounts for intangible assets, the estimated investment elasticity to tax incentives is generally larger than otherwise. It is also larger for intangible-intensive firms, and increases with firm size.Our paper is closely related to a large literature that empirically estimates the relationship between investment and q. It is well known that measurement error in q and misspecification problems, such as stock price bubbles and the presence ofanbsp;...
|Title||:||The Tax-adjusted Q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives|
|Author||:||Sophia Chen, Estelle Dauchy|
|Publisher||:||International Monetary Fund - 2014-06-12|