Hackworth, P. The Current and Expected Pricing Markup as Derived from the Capital Asset Pricing Model and Tobin’s Q and Applied to the UK’s FTSE 100. J. Risk Financial Manag.2024, 17, 127.
Hackworth, P. The Current and Expected Pricing Markup as Derived from the Capital Asset Pricing Model and Tobin’s Q and Applied to the UK’s FTSE 100. J. Risk Financial Manag. 2024, 17, 127.
Hackworth, P. The Current and Expected Pricing Markup as Derived from the Capital Asset Pricing Model and Tobin’s Q and Applied to the UK’s FTSE 100. J. Risk Financial Manag.2024, 17, 127.
Hackworth, P. The Current and Expected Pricing Markup as Derived from the Capital Asset Pricing Model and Tobin’s Q and Applied to the UK’s FTSE 100. J. Risk Financial Manag. 2024, 17, 127.
Abstract
Price markups and firm Tobin’s Q ratios are widely believed to have been increasing in the past several decades. Various models for the calculation of price markups have been developed, but each have methodological drawbacks and some results are poorly reflective of the near past wider macroeconomic experience. This paper defines an approach for the definition and measurement of markup pricing using the measure of Economic Rent and The Capital Asset Pricing Model. The results show limited markup pricing for The UK’s FTSE 100 companies (2018-2023), but that that certain Real Estate, Technology/Media and Financial Services/Equity Investment firms have enjoyed higher price markup levels. An analysis of the business models of these firms is used to qualitatively propose explanations for such markups. Finally, this work offers a formal proof that that expected price markup is equal to Tobin’s Q and finds that the empiric market level of markup is near equivalent to the market Tobin’s Q; differences between the markup and Tobin’s Q at the level of the firm are equally assessed.
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
