The Tax-adjusted Q Model with Intangible Assets : Theory and Evidence from Temporary Investment Tax Incentives

Author/Editor:

Estelle Dauchy ; Sophia Chen

Publication Date:

June 12, 2014

Electronic Access:

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Summary:

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 firm’s 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.

Series:

Working Paper No. 14/104

Subject:

English

Publication Date:

June 12, 2014

ISBN/ISSN:

9781498335478/1018-5941

Stock No:

WPIEA2014104

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

53

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