Table 9. Control for financial...

Table 9.

Control for financial misconduct and propensity score match

Variables	(1)	(2)			(3)			(4)
	Unmatched (U)	Mean			Standardized		\|Bias\|	t-test
	Matched (M)	Treated		Control	Bias%		Reduction%	t	p > \|t\|
Panel A: Covariate balance before and after propensity score matching
LIQ	U	1.959		3.082	−60.8			−21.860	0.000
	M	2.378		2.324	2.9		95.2	0.730	0.466
CA_TA	U	0.385		0.497	−60.6			−19.850	0.000
	M	0.436		0.430	3.0		95.0	0.570	0.569
INVREC	U	0.246		0.215	24.2			7.550	0.000
	M	0.241		0.238	2.8		88.5	0.510	0.610
ROA	U	0.112		0.101	11.8			3.950	0.000
	M	0.107		0.107	0.1		99.1	0.020	0.982
LOSS	U	0.044		0.109	−24.6			−8.390	0.000
	M	0.048		0.054	−2.2		91.0	−0.490	0.624
INTANG	U	0.253		0.263	−4.9			−1.570	0.115
	M	0.291		0.279	5.6		−13.9	1.010	0.311
GC	U	0.000		0.001	−1.4			−0.480	0.629
	M	0.001		0.001	0.0		100.0	0.000	1.000
MW	U	0.017		0.024	−5.0			−1.640	0.101
	M	0.026		0.025	1.0		79.4	0.170	0.864
RESTATE	U	0.000		0.000
	M	0.000		0.000
LEV	U	0.271		0.206	35.7			11.670	0.000
	M	0.237		0.247	−5.2		85.3	−0.960	0.337
Z	U	3.798		5.768	−41.5			−14.820	0.000
	M	4.423		4.373	1.1		97.5	0.240	0.814
SIZE	U	8.886		7.477	97.2			30.210	0.000
	M	7.828		7.959	−9.0		90.7	−1.800	0.073
MERGER	U	0.575		0.515	12.0			3.810	0.000
	M	0.590		0.592	−0.3		97.5	−0.060	0.956
FRGN	U	0.722		0.663	12.9			4.120	0.000
	M	0.695		0.699	−1.0		92.6	−0.180	0.860
LNSEG	U	2.090		1.696	63.9			20.270	0.000
	M	1.899		1.902	−0.4		99.3	−0.080	0.940
LNGEO	U	2.096		2.037	9.1			2.860	0.004
	M	2.063		2.065	−0.3		97.1	−0.050	0.963
BUSY	U	0.671		0.577	19.6			6.270	0.000
	M	0.623		0.621	0.3		98.4	0.060	0.955
BIG4	U	0.972		0.892	32.1			11.280	0.000
	M	0.930		0.937	−3.0		90.8	−0.540	0.588
SP	U	0.067		0.033	15.8			4.770	0.000
	M	0.054		0.051	1.4		91.4	0.240	0.809
LNTENURE	U	2.395		2.163	38.8			12.530	0.000
	M	2.251		2.281	−5.0		87.1	−0.930	0.355
AUD_CH	U	0.014		0.024	−7.1			−2.370	0.018
	M	0.018		0.015	2.1		70.1	0.430	0.668
LNAF	U	13.340		12.223	66.8			21.130	0.000
	M	12.755		12.752	0.2		99.7	0.030	0.973
DUAL	U	0.589		0.422	33.7			10.720	0.000
	M	0.419		0.443	−5.1		85.0	−0.930	0.353
CEOEXP	U	0.003		0.001	5.5			1.600	0.111
	M	0.001		0.001	0.0		100.0	0.000	1.000
Panel B: Propensity score distribution

Panel C: Propensity score matching results
Variables			(1)			(2)
Variables			LAF			LAF
LNPEN			0.020*** (4.439)
LNNUM						0.219*** (4.499)
Intercept			9.655*** (31.365)			9.656*** (31.254)
Control variables			Yes			Yes
Year and industry FE			Yes			Yes
N			1,362			1,362
Adjusted R²			0.734			0.736

Variables	(1)	(2)			(3)			(4)
	Unmatched (U)	Mean			Standardized		\|Bias\|	t-test
	Matched (M)	Treated		Control	Bias%		Reduction%	t	p > \|t\|
Panel A: Covariate balance before and after propensity score matching
LIQ	U	1.959		3.082	−60.8			−21.860	0.000
	M	2.378		2.324	2.9		95.2	0.730	0.466
CA_TA	U	0.385		0.497	−60.6			−19.850	0.000
	M	0.436		0.430	3.0		95.0	0.570	0.569
INVREC	U	0.246		0.215	24.2			7.550	0.000
	M	0.241		0.238	2.8		88.5	0.510	0.610
ROA	U	0.112		0.101	11.8			3.950	0.000
	M	0.107		0.107	0.1		99.1	0.020	0.982
LOSS	U	0.044		0.109	−24.6			−8.390	0.000
	M	0.048		0.054	−2.2		91.0	−0.490	0.624
INTANG	U	0.253		0.263	−4.9			−1.570	0.115
	M	0.291		0.279	5.6		−13.9	1.010	0.311
GC	U	0.000		0.001	−1.4			−0.480	0.629
	M	0.001		0.001	0.0		100.0	0.000	1.000
MW	U	0.017		0.024	−5.0			−1.640	0.101
	M	0.026		0.025	1.0		79.4	0.170	0.864
RESTATE	U	0.000		0.000
	M	0.000		0.000
LEV	U	0.271		0.206	35.7			11.670	0.000
	M	0.237		0.247	−5.2		85.3	−0.960	0.337
Z	U	3.798		5.768	−41.5			−14.820	0.000
	M	4.423		4.373	1.1		97.5	0.240	0.814
SIZE	U	8.886		7.477	97.2			30.210	0.000
	M	7.828		7.959	−9.0		90.7	−1.800	0.073
MERGER	U	0.575		0.515	12.0			3.810	0.000
	M	0.590		0.592	−0.3		97.5	−0.060	0.956
FRGN	U	0.722		0.663	12.9			4.120	0.000
	M	0.695		0.699	−1.0		92.6	−0.180	0.860
LNSEG	U	2.090		1.696	63.9			20.270	0.000
	M	1.899		1.902	−0.4		99.3	−0.080	0.940
LNGEO	U	2.096		2.037	9.1			2.860	0.004
	M	2.063		2.065	−0.3		97.1	−0.050	0.963
BUSY	U	0.671		0.577	19.6			6.270	0.000
	M	0.623		0.621	0.3		98.4	0.060	0.955
BIG4	U	0.972		0.892	32.1			11.280	0.000
	M	0.930		0.937	−3.0		90.8	−0.540	0.588
SP	U	0.067		0.033	15.8			4.770	0.000
	M	0.054		0.051	1.4		91.4	0.240	0.809
LNTENURE	U	2.395		2.163	38.8			12.530	0.000
	M	2.251		2.281	−5.0		87.1	−0.930	0.355
AUD_CH	U	0.014		0.024	−7.1			−2.370	0.018
	M	0.018		0.015	2.1		70.1	0.430	0.668
LNAF	U	13.340		12.223	66.8			21.130	0.000
	M	12.755		12.752	0.2		99.7	0.030	0.973
DUAL	U	0.589		0.422	33.7			10.720	0.000
	M	0.419		0.443	−5.1		85.0	−0.930	0.353
CEOEXP	U	0.003		0.001	5.5			1.600	0.111
	M	0.001		0.001	0.0		100.0	0.000	1.000
Panel B: Propensity score distribution
A two-panel graph compares treated and control propensity score density before and after matching.
Panel C: Propensity score matching results
Variables			(1)			(2)
Variables			LAF			LAF
LNPEN			0.020*** (4.439)
LNNUM						0.219*** (4.499)
Intercept			9.655*** (31.365)			9.656*** (31.254)
Control variables			Yes			Yes
Year and industry FE			Yes			Yes
N			1,362			1,362
Adjusted R²			0.734			0.736

Note(s):

*, ** and *** indicate significance (two-tailed) at 0.10, 0.05 and 0.01 levels, respectively. Standard errors are robust to heteroscedasticity and clustered by firm. The control variables used in Columns 1–2 are obtained from Model 1.

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