Information, investment, and the stock market: A study of investment revision data of Japanese manufacturing industries

Kazuo Ogawa and Kazuyuki Suzuki

Journal of the Japanese and International Economies, 2008, vol. 22, issue 4, 663-676

Abstract: We examined investment behavior in the Japanese manufacturing industry using investment revision data to analyze investment behavior from a fresh angle. We tested the martingale investment hypothesis and then the q-theory of investment by looking at the response of stock return and investment to news arriving at firms. The martingale hypothesis was accepted at early stage of investment planning, but not at later stages. We also found evidence for the validity of the q-theory hypothesis. Investment was responsive to profit rate revision and sales revision, but stock return responded only to profit rate revision. Further investigation revealed that investment was also motivated by expansion of market share for sales, especially for industries with rapid technological progress. J. Japanese Int. Economies 22 (4) (2008) 663-676.

Keywords: Investment; revision; Martingale; Stock; return; q; theory; Market; share; Flexible; accelerator; theory (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Working Paper: Information, Investment, and the Stock Market: A Study of Investment Revision Data of Japanese Manufacturing Industries (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:22:y:2008:i:4:p:663-676

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