Table 3. Heckman first-stage analysis...

Table 3.

Heckman first-stage analysis

Panel A: Summary statistics
	BigN firm-years (N = 27,810)		Non-BigN firm-years (N = 10,338)		Difference (BigN – Non-BigN)
	Mean	Median	Mean	Median	Mean	Median
SIZE	9.985	9.737	9.285	9.092	0.700***	0.646***
LOSS	0.155	0.000	0.218	0.000	−0.063***	0.000***
ROA	0.022	0.023	0.009	0.019	0.013***	0.004***
LEVERAGE	0.518	0.524	0.522	0.525	−0.004*	−0.001
LIQUIDITY	2.040	1.563	2.084	1.621	−0.044***	−0.058***
NEWISSUE	0.272	0.000	0.285	0.000	−0.013***	0.000***
REPORTLAG	42.203	43.000	43.341	44.000	−1.138***	−1.000***

Panel B: Estimation results of the 1st stage probit model
	Predicted Sign	Coefficient	z-statistic
Intercept	?	−0.5346	−2.42**
SIZE	+	0.1370	9.33***
LOSS	–	−0.0239	−0.77
ROA	+	1.4527	5.30***
LEVERAGE	–	0.1108	0.79
LIQUIDITY	+	0.0132	0.80
NEWISSUE	+	−0.0332	−1.73*
REPORTLAG	–	−0.0106	−4.09***
Pseudo-R² (%)	6.3
Observations	47,452

Note:

Panels A and B of the table present the summary statistics and estimation results of the following equation, respectively:

BIG N_{i, t} = φ_{0} + φ_{1} SIZ E_{i, t - 1} + φ_{2} LOS S_{i, t - 1} + φ_{3} RO A_{i, t - 1} + φ_{4} LEVERAG E_{i, t - 1} + φ_{5} LIQUIDIT Y_{i, t - 1} + φ_{6} NEWISSU E_{i, t - 1} + φ_{7} REPORTLA G_{i, t - 1} + γ Year Dummies + δ I n d u s t r y Dummies + ε_{i, t}

(1)

BIGN captures audit quality and equals 1 if a firm is audited by a Big N auditor and 0 otherwise. SIZE denotes firm size and is the natural logarithm of lagged market value of equity. LOSS is 1 if net income is negative and 0 otherwise. ROA is the ratio of net income to total assets. LEVERAGE is the ratio of total liabilities to total assets. LIQUIDITY is the current ratio. NEWISSUE is 1 if a firm’s shares outstanding or total long-term debt increase by 10% and 0 otherwise. REPORTLAG is the lag between the fiscal year-end and the earnings announcement date. Year and industry fixed effects are included. * and *** indicate significance at the 10 and 1% levels, respectively (two-tailed).

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Panel A: Summary statistics
	BigN firm-years(N = 27,810)		Non-BigN firm-years(N = 10,338)		Difference(BigN – Non-BigN)
	Mean	Median	Mean	Median	Mean	Median
SIZE	9.985	9.737	9.285	9.092	0.700***	0.646***
LOSS	0.155	0.000	0.218	0.000	−0.063***	0.000***
ROA	0.022	0.023	0.009	0.019	0.013***	0.004***
LEVERAGE	0.518	0.524	0.522	0.525	−0.004*	−0.001
LIQUIDITY	2.040	1.563	2.084	1.621	−0.044***	−0.058***
NEWISSUE	0.272	0.000	0.285	0.000	−0.013***	0.000***
REPORTLAG	42.203	43.000	43.341	44.000	−1.138***	−1.000***

Panel B: Estimation results of the 1st stage probit model
	Predicted Sign	Coefficient	z-statistic
Intercept	?	−0.5346	−2.42**
SIZE	+	0.1370	9.33***
LOSS	–	−0.0239	−0.77
ROA	+	1.4527	5.30***
LEVERAGE	–	0.1108	0.79
LIQUIDITY	+	0.0132	0.80
NEWISSUE	+	−0.0332	−1.73*
REPORTLAG	–	−0.0106	−4.09***
Pseudo-R² (%)	6.3
Observations	47,452

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