Endogeneity in Empirical Corporate Finance1

Michael R. Roberts and Toni Whited

Chapter Chapter 7 in Handbook of the Economics of Finance, 2013, vol. 2, pp 493-572 from Elsevier

Abstract: This chapter discusses how applied researchers in corporate finance can address endogeneity concerns. We begin by reviewing the sources of endogeneity—omitted variables, simultaneity, and measurement error—and their implications for inference. We then discuss in detail a number of econometric techniques aimed at addressing endogeneity problems, including instrumental variables, difference-in-differences estimators, regression discontinuity design, matching methods, panel data methods, and higher order moments estimators. The unifying themes of our discussion are the emphasis on intuition and the applications to corporate finance.

Keywords: Instrumental Variables; Difference-in-Differences Estimators; Regression Discontinuity Designs; Matching Estimators; Measurement Error; G3; C21; C23; C26 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (409)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finchp:2-a-493-572

DOI: 10.1016/B978-0-44-453594-8.00007-0

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