Test power properties of within-firm estimators of ownership and board-related explanatory variables with low time variation

Maria Boutchkova (), Diego Cueto () and Angelica Gonzalez ()
Additional contact information
Maria Boutchkova: University of Edinburgh Business School
Diego Cueto: ESAN, Graduate School of Business
Angelica Gonzalez: University of Edinburgh Business School

Review of Quantitative Finance and Accounting, 2022, vol. 59, issue 3, No 12, 1215-1269

Abstract: Abstract Corporate governance research is often limited in its ability to employ within-firm estimators, which address time-invariant endogeneity, when the variables of interest exhibit low time variation (for example, ownership and board independence). The problem is further exacerbated if data for multiple points in time needs to be hand-collected. We offer simulation-based methodological guidance to improve the statistical power of within-firm estimators in the presence of low time variation. We illustrate the usefulness of our simulation results by replicating two influential studies on ownership and board independence and extending them with a within-firm estimator. Based on widely used databases as well as a novel granular database, we document the different degrees and nature of time variation of ownership and board independence across jurisdictions and subgroups by listed status, family control and complexity of ownership structure. Researchers can use our findings to optimize the hand-collection and pre-processing of governance data and thereby increase statistical power and/or to distinguish whether lack of significance is due to low time variation as opposed to absence of a true relationship between their governance variable of interest and the respective outcome.

Keywords: Controlling ownership; Ultimate cash flow rights; Control rights; Ownership wedge; Board independence; Low time variation; Family firms; Within-firm estimator; Pyramid structures (search for similar items in EconPapers)
JEL-codes: G15 G32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11156-022-01074-8 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:rqfnac:v:59:y:2022:i:3:d:10.1007_s11156-022-01074-8

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/11156/PS2

DOI: 10.1007/s11156-022-01074-8

Access Statistics for this article

Review of Quantitative Finance and Accounting is currently edited by Cheng-Few Lee

More articles in Review of Quantitative Finance and Accounting from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().