The Tax-adjusted Q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives
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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. 2014/104
Subject:
Asset and liability management Asset valuation Depreciation Financial institutions Investment incentives National accounts Stocks Tax incentives Taxes
English
Publication Date:
June 12, 2014
ISBN/ISSN:
9781498335478/1018-5941
Stock No:
WPIEA2014104
Pages:
53
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