Looking at the relationship between earnings quality and Market values: what proxies can be used for Market values
A commonly used proxy is Tobin's q. It is often approximated by
(market value of equity + book value of debt) / (total assets).
Solomon
Lots of researchers usually use the Tobin's Q ratio, which defines as market value of assets over book value of assets, and measured at each year-end. Market-based total asset is the book value of assets less the book value of equity plus the market value of equity.
Otherwise, some others use the ratios of financial performance like as ROA and ROE as a proxies for firm value.
Further, Earnings per share as the portion of a firm's profit per each outstanding share of common stock.
As well, Price-earnings ratio as the market value per share relative to earnings per share.
Best,,,
Studies have been measuring Firm value with Tobin;s Q. In a research work: Earnings quality and Market values, what is the experts advise on the proper measuring proxies of market values? Can Tobin's q still be used, most appropriate?
- Badges
- Science topic
- Similar topics
- Econ
- Business Economics