Spillover effects in empirical corporate finance
Markus Reisinger and
Journal of Financial Economics, 2021, vol. 142, issue 3, 1109-1127
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)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:142:y:2021:i:3:p:1109-1127
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