Spillover Effects in Empirical Corporate Finance

Markus Reisinger, Tobias Berg and Daniel Streitz

No 15549, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Despite their importance, the discussion of spillover effects in empirical research often misses the rigor dedicated to endogeneity concerns. We analyze a broad set of workhorse models of firm interactions and show that spillovers naturally arise in many corporate finance settings. This has important implications for the estimation of treatment effects: i) even with random treatment, spillovers lead to a complicated bias, ii) fixed effects can exacerbate the spillover-induced bias. We propose simple diagnostic tools for empirical researchers and illustrate our guidance in an application.

Keywords: Spillovers; Direct vs. indirect effects; Credit supply (search for similar items in EconPapers)
JEL-codes: C13 C21 G21 G32 M41 M42 R11 R23 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-cwa, nep-ecm, nep-ore and nep-ure
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