Table 2 Effects of informational...

Table 2

Effects of informational faultlines on return on assets ^a

VARIABLES	Fixed effects			System GMM ^b
VARIABLES	Model 1	Model 2	Model 3	Model 4	Model 5
Firm age (ln)	0.063* (0.038)	0.062 (0.038)	0.079 (0.059)	−0.019 (0.035)	−0.013 (0.031)
Firm size (ln)	0.068*** (0.019)	0.064***(0.019)	0.064*** (0.023)	0.074 (0.048)	0.055 (0.046)
Board size	−0.009** (0.004)	−0.008* (0.004)	−0.009* (0.005)	−0.016 (0.039)	−0.003 (0.037)
Block ownership	0.158** (0.067)	0.148** (0.061)	0.119* (0.069)	0.176 (0.225)	−0.021 (0.238)
CEO ownership	−0.006 (0.043)	−0.000 (0.045)	0.014 (0.064)	−0.191 (0.233)	−0.041 (0.231)
Board heterogeneity	0.027 (0.113)	0.056 (0.115)	0.043 (0.122)	0.621 (0.661)	1.052 (0.720)
Firm leverage	−0.437*** (0.070)	−0.439*** (0.070)	−0.458*** (0.063)	−0.509*** (0.120)	−0.427*** (0.131)
Social category faultlines	−0.004 (0.042)	0.015 (0.041)	0.009 (0.044)	−0.027 (0.146)	−0.021 (0.135)
Return on assets_t₋₁			−0.031 (0.036)	−0.064 (0.119)	−0.079 (0.107)
Informational faultlines		−0.708*** (0.256)	−0.815** (0.315)		−1.853*** (0.709)
Informational faultlines²		1.765*** (0.529)	2.031*** (0.688)		2.960*** (1.127)
Year dummies	Included	Included	Included	Included	Included
Industry dummies	Not included	Not included	Not included	Included	Included
Observations	804	804	698	698	698
Number of IDs	106	106	102	102	102
p-Value	0.000	0.000	0.000	0.000	0.000
R-squared	0.475	0.484	0.505
F-statistic	8.18	8.30	20.68
Chi-square				92.26	73.98
AR(1) test (p-value)				0.068	0.091
AR(2) test (p-value)				0.202	0.136
Hansen test of overidentification(p-value)				0.510	0.825
Difference-in-Hansen tests of exogeneity (p-value)				0.109	0.305
Number of instruments				29	31

VARIABLES	Fixed effects			System GMM ^b
VARIABLES	Model 1	Model 2	Model 3	Model 4	Model 5
Firm age (ln)	0.063* (0.038)	0.062 (0.038)	0.079 (0.059)	−0.019 (0.035)	−0.013 (0.031)
Firm size (ln)	0.068*** (0.019)	0.064***(0.019)	0.064*** (0.023)	0.074 (0.048)	0.055 (0.046)
Board size	−0.009** (0.004)	−0.008* (0.004)	−0.009* (0.005)	−0.016 (0.039)	−0.003 (0.037)
Block ownership	0.158** (0.067)	0.148** (0.061)	0.119* (0.069)	0.176 (0.225)	−0.021 (0.238)
CEO ownership	−0.006 (0.043)	−0.000 (0.045)	0.014 (0.064)	−0.191 (0.233)	−0.041 (0.231)
Board heterogeneity	0.027 (0.113)	0.056 (0.115)	0.043 (0.122)	0.621 (0.661)	1.052 (0.720)
Firm leverage	−0.437*** (0.070)	−0.439*** (0.070)	−0.458*** (0.063)	−0.509*** (0.120)	−0.427*** (0.131)
Social category faultlines	−0.004 (0.042)	0.015 (0.041)	0.009 (0.044)	−0.027 (0.146)	−0.021 (0.135)
Return on assets_t₋₁			−0.031 (0.036)	−0.064 (0.119)	−0.079 (0.107)
Informational faultlines		−0.708*** (0.256)	−0.815** (0.315)		−1.853*** (0.709)
Informational faultlines²		1.765*** (0.529)	2.031*** (0.688)		2.960*** (1.127)
Year dummies	Included	Included	Included	Included	Included
Industry dummies	Not included	Not included	Not included	Included	Included
Observations	804	804	698	698	698
Number of IDs	106	106	102	102	102
p-Value	0.000	0.000	0.000	0.000	0.000
R-squared	0.475	0.484	0.505
F-statistic	8.18	8.30	20.68
Chi-square				92.26	73.98
AR(1) test (p-value)				0.068	0.091
AR(2) test (p-value)				0.202	0.136
Hansen test of overidentification(p-value)				0.510	0.825
Difference-in-Hansen tests of exogeneity (p-value)				0.109	0.305
Number of instruments				29	31

Notes: ^a106 public firms (representing 804 firm-year observations) from 2006 to 2014; robust standard errors in parentheses; ^b For system GMM, the first year is dropped, and firms listed for only one year are excluded. *p < 0.1; **p < 0.01; ***p < 0.001

Source: Created by authors

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