Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98606
Authors: 
Gander, James
Year of Publication: 
2014
Series/Report no.: 
Working Paper, University of Utah, Department of Economics 2014-03
Abstract: 
Treasury stock and firm market value using a modified Tobin's q are modeled by using a firm utility preference function and a quadratic constraint function. The choice of the quadratic form is based on an econometric analysis of the relationship of q to T, the amount of treasury stock held by the firm. US industrial corporations were sampled for the quarterly period from 1969 to 2013. There are 1,041 panels (firms) and some 32,494 overall observations. The statistical results were quite good. The firm's optimum solution resulted in a q that is less than the maximum q given by the inverted U-shaped constraint. I argue that stockholders would prefer the maximum q.
Subjects: 
Treasury Stock
Firm Market Value
Utility Preference Function
JEL: 
C40
C33
G30
Document Type: 
Working Paper

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