"Growth of technological variety offers more scope for the division of labor. And when a division of labor requires some specific training, the technological specificity of human capital grows and, with it, probably the firm specificity of that capital. We build a simple model that captures this...

Investment of U.S. firms responds asymmetrically to Tobin's Q: investment of established firms -- 'intensive' investment -- reacts negatively to Q whereas investment of new firms -- 'extensive' investment -- responds positively and elastically to Q. This asymmetry, we argue, reflects a...

The Q-theory of investment says that a firm's investment rate should rise with its Q. We argue here that this theory also explains why some firms buy other firms. We find that 1. A firm's merger and acquisition (Mamp;A) investment responds to its Q more -- by a factor of 2.6 -- than its direct...