Hi all,
I calculate Tobin's Q as the ratio of firm's market value (Vit) to gross capital stock(ppegt), where market value Vit as the market value of outstanding equity (Compustat items prcc _ f times csho ), plus the book value of debt (Compustat items dltt + dlc), minus the firm’s current assets (Compustat item act ), which include cash, inventory, and marketable securities.
This approach generates negative Vit when act>(dltt+dlc+(prcc_f*csho)) and thereby negative Tobin's q for 34000+ observation. What is the standard norm of fixing the negative Vit? Should I set firm’s excess current assets ( act) over book value of debt (dltt + dlc) to zero or leave as it is?
I calculate Tobin's Q as the ratio of firm's market value (Vit) to gross capital stock(ppegt), where market value Vit as the market value of outstanding equity (Compustat items prcc _ f times csho ), plus the book value of debt (Compustat items dltt + dlc), minus the firm’s current assets (Compustat item act ), which include cash, inventory, and marketable securities.
This approach generates negative Vit when act>(dltt+dlc+(prcc_f*csho)) and thereby negative Tobin's q for 34000+ observation. What is the standard norm of fixing the negative Vit? Should I set firm’s excess current assets ( act) over book value of debt (dltt + dlc) to zero or leave as it is?
Code:
* Example generated by -dataex-. To install: ssc install dataex clear input int fyear long gvkey str30 conm float(act csho prcc_f dlc dltt Vit) 2017 27301 "IMPERIAL GINSENG PRODS LTD" 15.483 7.21 1 .24 2.303 -5.73 2017 9323 "PARAGON TECHNOLOGIES INC" 29.699 1.685 1.2 7.836 0 -19.841 2017 17501 "TRUETT-HURST INC" 23.829 4.427 2.08 7.792 3.065 -3.763841 2017 133727 "CHINA EDUCATION RESOURCES" 11.244 47.365 .095 1.63 0 -5.114325 2017 179147 "YEW BIO-PHARM GROUP INC" 35.434 51.875 .195 6.099 0 -19.219376 2017 12545 "HARTE HANKS INC" 103.206 62.1 .9487 .506 .486 -43.29974 2017 20529 "EASTERN PLATINUM LTD" 34.665 92.599 .33 0 0 -4.1073303 2017 112774 "ECHELON CORP" 29.369 4.52 5.5388 0 0 -4.333624 2017 3275 "COMMUNICATIONS SYSTEMS INC" 45.466 8.974 3.56 0 0 -13.51856 2017 18582 "GOODFELLOW INC" 153.395 8.507 8.33 52.448 .055 -30.028687 2017 26520 "SCHMITT INDUSTRIES INC/OR" 10.018 3.995 2.29 0 0 -.8694496 2017 13997 "TORSTAR CORP -CL B" 203.135 80.854 1.71 0 0 -64.874664 2017 149683 "CHINA AUTOMOTIVE SYSTEMS INC" 532.603 31.644 4.8 156.559 .306 -223.84683 2017 187375 "RMG NETWORKS HOLDING CORP" 14.247 11.156 .82 1.25 0 -3.84908 2017 10380 "SUNLINK HEALTH SYSTEMS INC" 22.621 9.163 1.66 6.71 0 -.7004204 2017 275264 "AKERS BIOSCIENCES INC" 7.776 44.221 .134 0 0 -1.8503857 2017 183224 "CHINANET ONLINE HOLDINGS" 16.9 13.983 1.09 .765 .134 -.7595291 2017 65461 "TEFRON LTD" 47.862 11.87 .8 14.185 11.054 -13.127 2017 18892 "TAKUNG ART CO LTD" 49.567 11.189 2.5101 7.693 0 -13.788492 2017 10981 "ESSENDANT INC" 1512.729 37.624 9.27 6.079 492.044 -665.8314 2017 153128 "HUDSON GLOBAL INC" 97.043 31.159 2.25 7.155 .052 -19.72825 2017 28924 "BARNES & NOBLE INC" 1098.68 72.653 5.55 0 158.7 -536.75586 2017 287106 "GOBIMIN INC" 31.776 50.005 .39 1.265 0 -11.00905 2017 2504 "UNISYS CORP" 1389.5 50.5 8.15 10.8 633.9 -333.225 2017 176082 "PHARMA-BIO SERV INC" 19.537 23.09 .5 .014 .06 -7.918001 2017 8213 "OWENS & MINOR INC" 2181.905 61.476 18.88 16.619 900.744 -103.87512 2017 187294 "CENTURY GLOBAL COMMODITIES" 25.236 98.495 .2 0 0 -5.536999 2017 20269 "CALDWELL PARTNERS INTL INC" 27.206 20.405 1.06 0 0 -5.5767 2017 176661 "JA SOLAR HOLDINGS CO LTD" 1533.587 47.585 7.46 611.722 482.424 -84.45694 2017 25923 "HG HOLDINGS INC" 28.528 14.92 .87 0 0 -15.5476 2017 7171 "MCKESSON CORP" 37136 202 140.87 1129 6751 -800.2617 2017 29951 "BUHLER INDUSTRIES INC" 254.894 25 4.45 12.553 0 -131.091 2017 188855 "CAFEPRESS INC" 38.748 16.932 1.8454 0 0 -7.50169 2017 3465 "CONTINENTAL MATERIALS CORP" 47.051 1.682 19 3.5 0 -11.592999 2017 4194 "EASTMAN KODAK CO" 958 42.6 3.1 4 399 -422.94 2017 12471 "WORLD FUEL SERVICES CORP" 3940.4 67.7 28.14 25.6 884.6 -1125.1221 2017 137874 "SMTC CORP" 59.188 16.993 1.8906 14.365 6.089 -6.607037 2017 15016 "PHOENIX CANADA OIL CO LTD" 9.398 4.887 1.45 0 0 -2.3118496 2017 138501 "CERAGON NETWORKS LTD" 210.812 78.045 1.98 0 0 -56.2829 2017 25935 "GULF RESOURCES INC" 241.513 46.804 1.47 .203 2.304 -170.2041 2017 180597 "STR HOLDINGS INC" 18.227 19.918 .2301 .454 0 -13.189867 2017 273726 "SEADRILL LTD" 2252 504.519 .2313 519 799 -817.3047 2017 2811 "CASTLE (A M) & CO" 253.815 3.734 .11 5.972 210.051 -37.381268 2017 8336 "PARADISE INC" 20.491 .52 28.03 .541 0 -5.374399 2017 158055 "DYADIC INTERNATIONAL INC" 49.616 28.328 1.39 0 0 -10.240082 2017 3962 "NORTECH SYSTEMS INC" 37.767 2.739 3.86 1.298 14.078 -11.818459 2017 184182 "JINKOSOLAR HOLDING CO" 3013.672 33.037 24.05 1860.411 187.002 -171.71936 2017 184585 "NOVA LIFESTYLE INC" 74.917 28.192 2.4 0 4.202 -3.0541916 2017 32677 "SPARK NETWORKS SE" 26.489 1.08 12.65 7.033 0 -5.794002 2017 178387 "OMNITEK ENGINEERING CORP" 1.607 20.281 .0651 .03 0 -.25670695 2017 163949 "SAHARA ENERGY LTD" 10.912 289.684 .03 0 0 -2.2214804 2017 64488 "EURO TECH HOLDINGS CO LTD" 9.616 2.062 3.31 .097 0 -2.69378 2017 31418 "PROPHASE LABS INC" 28.919 11.13 2.17 0 0 -4.766899 2017 10619 "TOROTEL INC" 6.062 5.996 .66 1.706 .13 -.2686398 2017 3184 "CCOM GROUP INC" 29.383 9.155 .65 14.745 .646 -8.04125 2017 63904 "CIA BRASILEIRA DE DISTRIB" 10029.89 166.666 23.57 458.923 1007.518 -4635.131 2017 24837 "ALLIED HEALTHCARE PRODS INC" 13.198 4.014 2.89 0 0 -1.59754 2017 24204 "INSIGNIA SYSTEMS INC" 17.635 11.914 1.1899 0 0 -3.4585314 2017 22789 "SINO AGRO FOOD INC" 228.549 29.262 .88 38.908 17.135 -146.75543 2017 24142 "DELTA TECHNOLOGY HOLDINGS" 86.668 11.062 1.73 66.414 0 -1.1167374 2017 31424 "CHINA YUCHAI INTERNATIONAL" 2460.535 40.858 24 245.921 4.056 -1229.966 2017 111535 "SAKER AVIATION SERVICES INC" 4.628 32.118 .1225 .345 .113 -.23554444 2017 152290 "ORSU METALS CORP" 6.436 35.719 .165 0 0 -.5423641 2017 178327 "CHINA XD PLASTICS CO LTD" 1473.046 49.728 4.6 775.396 114.209 -354.6923 2017 180145 "FORBES ENERGY SERVICES LTD" 71.529 5.336 .01 7.566 51.288 -12.621643 2017 178795 "AGRIA CORP -ADS" 415.46 55.058 .849 48.191 95.508 -225.01675 2017 25726 "CPI AEROSTRUCTURES INC" 120.382 8.864 8.95 24.848 7.019 -9.182198 2017 5165 "GIGA-TRONICS INC" 7.423 10.313 .33 2.051 .062 -1.9067094 2017 21802 "PROTEON THERAPEUTICS INC" 43.48 17.675 1.9 0 0 -9.897503 2017 20517 "LIMBACH HOLDINGS INC" 166.26 7.504 13.83 14.138 20.556 -27.785675 2017 112030 "CUMULUS MEDIA INC" 393.62 29.307 .075 0 0 -391.422 2017 126496 "CARTESIAN INC" 14.969 9.447 .163 7.663 0 -5.766139 2017 64021 "HOPTO INC" 1.555 9.804 .137 0 0 -.21185207 2017 264713 "INFOSONICS CORP -OLD" 11.979 3.378 1.4371 0 0 -7.124476 2017 4467 "EVANS & SUTHERLAND CMP CORP" 17.077 11.353 .99 .224 1.54 -4.07353 2017 25711 "ESCALON MEDICAL CORP" 4.155 7.551 .21 .795 0 -1.7742902 2017 105709 "CABO DRILLING CORP" 11.828 93.868 .015 4.692 .052 -5.67598 2017 178201 "VITAMIN SHOPPE INC" 279.454 24.022 4.4 12.558 127.769 -33.430214 2017 20646 "ORVANA MINERALS CORP" 66.339 136.623 .25 16.755 6.028 -9.4002495 2017 24428 "ADDVANTAGE TECHNOLOGIES GP" 32.419 10.226 1.38 4.189 2.095 -12.02312 2017 160809 "CYCLACEL PHARMACEUTICALS" 25.974 11.997 1.74 0 0 -5.099222 2017 18844 "SHARING ECONOMY INTL INC" 22.926 2.528 7.58 3.168 0 -.59576035 2017 27920 "VICAL INC" 76.317 21.802 1.83 0 0 -36.419342 2017 22138 "TANTECH HOLDINGS LTD" 89.245 28.703 2.58 12.185 0 -3.0062714 2017 19753 "RUBICON PROJECT INC" 304.656 50.239 1.87 0 0 -210.70908 2017 166272 "ATHABASCA MINERALS INC" 6.545 33.304 .14 .456 .029 -1.39744 2017 25357 "FINISH LINE INC -CL A" 462.138 40.37 10.62 0 0 -33.40863 2017 148772 "CBAK ENERGY TECHNOLOGY INC" 85.244 26.223 1.475 14.636 19.49 -12.43908 2017 8486 "TUTOR PERINI CORP" 3074.392 49.781 25.35 30.748 705.528 -1076.1678 2017 61030 "DESWELL INDUSTRIES INC" 68.905 15.885 3.12 0 0 -19.3438 2017 25186 "STEIN MART INC" 304.831 47.978 .68 13.738 142.387 -116.08095 2017 18786 "PLEDGE PETROLEUM CORP" 8.625 268.559 .0041 .003 0 -7.520908 2017 106915 "IMAGING DYNAMICS CO LTD" 19.593 58.858 .025 12.035 5.472 -.6145504 2017 178413 "FITLIFE BRANDS INC" 6.32 10.682 .2442 2.365 0 -1.3464556 2017 29698 "SIGMATRON INTERNATIONAL INC" 120.03 4.215 6.78 2.976 41.082 -47.3943 2017 65867 "MCCOY GLOBAL INC" 46.529 27.684 1.39 4.93 0 -3.11824 2017 177734 "CHINA ADVANCED CONSTR MATLS" 76.735 2.388 2.5 31.713 0 -39.052 2017 106336 "EUROCONTROL TECHNICS GRP INC" 9.748 90.75 .07 0 0 -3.3955 2017 4903 "FRIEDMAN INDUSTRIES INC" 59.979 7.009 5.87 0 0 -18.83617 2017 62396 "IDT CORP" 371.117 24.838 14.81 0 0 -3.266235 end
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