Capital investment should be correlated with investment opportunity sets, and investment outcomes, thus capital investment proxies could be validated against these benchmarks. The authors find that the choice of deflator is important to the performance of capital-expenditure-based proxies that are commonly applied in the literature. In addition, capital-expenditure-based proxies often underperform investment proxies constructed on some simple accounting information. The paper explores some

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... es of the difference in performance across various investment proxies. Panel C: Investment realization measures SGRO+3 Sale (data12) in year t+2 / sale in year t-1 -1. Panel D: Contemporaneous measures EMPGRO Growth in number of employees, defined as data29 at the end of fiscal year t over its beginning balance -1.