Exit, selection, and the value of firms
This paper studies a competitive dynamic model with firm level uncertainty and derives implications for the distribution of firm values and Tobin's q. Allowing for entry and exit, the model determines endogenously the degree of selection. A consequence of this selection is that average industry...
Saved in:
Published in | Journal of economic dynamics & control Vol. 16; no. 3; pp. 621 - 653 |
---|---|
Main Author | |
Format | Journal Article |
Language | English |
Published |
Amsterdam
Elsevier B.V
01.07.1992
Elsevier Elsevier Sequoia S.A |
Series | Journal of Economic Dynamics and Control |
Subjects | |
Online Access | Get full text |
Cover
Loading…
Summary: | This paper studies a competitive dynamic model with firm level uncertainty and derives implications for the distribution of firm values and Tobin's
q. Allowing for entry and exit, the model determines endogenously the degree of selection. A consequence of this selection is that average industry
q values are biased above one. As parameters describing the technology and firm level uncertainty are changed, the equilibrium distribution for
q values changes. This comparative statics is developed in the paper. |
---|---|
Bibliography: | ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 0165-1889 1879-1743 |
DOI: | 10.1016/0165-1889(92)90052-G |