Research by Chirinko (1987) based on aggregate macroeconomic data suggests that Tobin's Q theory is unlikely to provide a satisfactory model of firms' capital investment behavior. Klock et al. (1991), making use of firm-level time series data, have shown that Q is commonly mismeasured. Other researchers have stressed the importance of intangible capital. We tested Chirinko's model, with and without proxies for intangible capital. Our results show that the inclusion of intangible capital strengthens the model, and that financial policy plays an important role in the capital investment decision. It appears that rejection of the Q model is premature.