Calculating Tobin’s Q
Posted: 05 January 2016 02:46 PM   [ Ignore ]
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Hello!

I’m new to WRDS, databases and research in general, so please bear with me. smile

I’m using below formula to calculate Tobin’s Q for U.S. companies, but realized some of the variables are not available (or the variable names are not the same) in the Global data set.
Tobin’s Q = [(csho* prcc_f)+(pstkl)+(lct-act+dltt)]/at

What would be the equivalent variables and formula to use for global data set?

Also, I noticed that some U.S. companies have non-zero values for CSHO in some of the years before they go public. Are private shares of stock still considered “common shares”?

Thanks in advance for your help.

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Posted: 08 January 2016 08:29 PM   [ Ignore ]   [ # 1 ]
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hi Ssk,

For Tobin’s q, you’ll need to merge with the return dataset to get to stock price info. I’m not sure how well the other variables are covered (you could always assume that liabilities equal assets minus equity).

Yes, unlisted firms have common shares as well; see for example S1 (IPO prospectus) filings in SEC Edgar, for example the one for Google: http://www.sec.gov/Archives/edgar/data/1288776/000119312504073639/ds1.htm

The net income per share footnote for years 2001-2003 (before the IPO in 2004) show the EPS calculations.

Best,

Joost

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Posted: 06 May 2016 11:28 PM   [ Ignore ]   [ # 2 ]
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Hi Joost, I noticed that some papers used Tobin’s Q while others use abnormal stock returns as a measure of shareholder value (or firm value). I’m inclined to use Tobin’s Q but not sure how to explain the advantages of Tobin’s Q over abnormal stock returns, can you give me some suggestions? Thanks

Joost Impink - 08 January 2016 08:29 PM

hi Ssk,

For Tobin’s q, you’ll need to merge with the return dataset to get to stock price info. I’m not sure how well the other variables are covered (you could always assume that liabilities equal assets minus equity).

Yes, unlisted firms have common shares as well; see for example S1 (IPO prospectus) filings in SEC Edgar, for example the one for Google: http://www.sec.gov/Archives/edgar/data/1288776/000119312504073639/ds1.htm

The net income per share footnote for years 2001-2003 (before the IPO in 2004) show the EPS calculations.

Best,

Joost

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Posted: 08 May 2016 06:09 AM   [ Ignore ]   [ # 3 ]
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Hi Fcong,

Return and abnormal return are more measures of performance (these are changes in value). I’m afraid I don’t have a reference; can you just quote earlier papers on the topic?

Best,

Joost

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