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

 
Author/Editor: Sophia Chen ; Estelle Dauchy
 
Publication Date: June 12, 2014
 
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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(s): Intangible capital | Investment | Tax incentives | Tax changes | Econometric models

 
English
Publication Date: June 12, 2014
ISBN/ISSN: 9781498335478/1018-5941 Format: Paper
Stock No: WPIEA2014104 Pages: 53
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