The Tobin q as a Company Performance Indicator

Abstract

"Various economic indicators of a business game company's performance exist. The Tobin q was examined as an indicator of the firm's effectiveness from an investment perspective across a variety of top management games. The Tobin q was also compared to the Altman Z as another indicator of the firm's economic viability. The q was inconsistently related to each game's own performance indicator across games and may be contextual regarding its applicability due to game complexity and player skill level considerations. Students playing a business game typically want to know how well they are doing. This is a natural outcome of the competitive environments created by the simulations themselves while serving to reinforce the ""business ethic"" of accountability and the results by which the players will be judged in their business careers. Although there have been a number of diverse recommendations as to what should be measured all games feature economic performance measures in either partial or global forms. This paper investi-gates the use of Tobin's q as a more-meaningful way to judge the comparative performance of firms in business games. The results were inconclusive and indicate further investigation would be useful. "