Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92860
Authors: 
Ogawa, Kazuo
Suzuki, Kazuyuki
Year of Publication: 
2007
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 681
Abstract: 
We examined investment behavior in the Japanese manufacturing industry using investment revision data to analyze investment behavior from a fresh angle. We tested the martingale investment hypothesis and then the q-theory of investment by looking at the response of stock return and investment to news arriving at firms. The martingale hypothesis was generally accepted, and we also found evidence for the validity of the q-theory hypothesis. Investment was responsive to profit rate revision and sales revision, but stock return responded only to profit rate revision. Further investigation revealed that investment was also motivated by expansion of market share for sales, especially for industries with rapid technological progress.
Subjects: 
investment revision
martingale
stock return
q theory
market share
flexible accelerator theory
JEL: 
E22
E44
Document Type: 
Working Paper

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