• 1 Introduction
  • 1.1 Related literature
  • 2 The Model
  • 2.1 The Problem of the Firm
  • 2.2 Optimal Investment Policies
  • 2.3 Optimal Financing Policies
  • 3 Testing Q-theory on Corporate Policies
  • 3.1 Empirical Approach
  • 3.2 Testing Q-theory on Investment Policies
  • 3.3 Testing Q-theory on Financing Policies
  • 3.4 Robustness checks
  • 4 Asset pricing implications
  • 4.1 An extension of the basic model
  • 4.2 Why has the model worked for stock returns?
  • 5 Conclusions
  • References
  • 6 Appendix
  • 6.1 Average Q and marginal q
  • 6.2 Binding collateral constraints
  • 6.3 The inaction region of investment