Currently, I am analyzing capital expenditure of takeover-targets in the year prior to the takeover.
The dependent variable is capital expenditure and one of the explanatory variables is Tobin's q. High value results in lower financing costs which affects capital expenditure. However, capital expenditure is also likely to directly affect firm value.
I would like to solve this endogeneity issue by means of 2SLS without using instrumental variables, how should I proceed?
Thank you in advance.