The effect of ex-military CEOs on income smoothing: instrumental variable analysis using industry-year average instruments
| Variables | MILITARY_CEO | SMTHt,t + 4 |
|---|---|---|
| MILITARY_CEO (instrumented) | 0.329*** (3.584) | |
| INDUSTRY_AVGt − 2 | 4.384*** (8.416) | |
| INDUSTRY_AVGt − 3 | 1.304*** (2.693) | |
| Observations | 28,426 | 28,426 |
| Adjusted R-squared | 0.193 | 0.351 |
| Firm controls | YES | YES |
| CEO controls | YES | YES |
| Firm and year FEs | YES | YES |
| Hansen p-value | 0.378 | |
| Cragg–Donald Wald F-statistic | 208.717 | |
| Kleibergen–Paap Wald F-statistic | 131.295 | |
| Variables | MILITARY_CEO | |
|---|---|---|
| MILITARY_CEO (instrumented) | 0.329 | |
| INDUSTRY_AVGt − 2 | 4.384 | |
| INDUSTRY_AVGt − 3 | 1.304 | |
| Observations | 28,426 | 28,426 |
| Adjusted | 0.193 | 0.351 |
| Firm controls | ||
| Firm and year FEs | ||
| Hansen | 0.378 | |
| Cragg–Donald Wald | 208.717 | |
| Kleibergen–Paap Wald | 131.295 | |
This table reports first-stage (Column 1) and second-stage (Column 2) 2SLS results using industry-year average military CEO composition as alternative instruments. Instruments are INDUSTRY_AVGt − 2 and INDUSTRY_AVGt − 3, constructed as the mean proportion of military CEOs within each industry-year (excluding the focal firm), lagged by 2 and 3 years respectively. The first stage predicts MILITARY_CEO; the second stage regresses SMTH on instrumented MILITARY_CEO and controls. Standard errors are clustered at the firm level. The z-statistics are reported in parentheses below. ***, ** and * denote two-tailed significance at the 0.01, 0.05 and 0.10 levels, respectively. All variables are defined in Appendix 1
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