Table 4 Robustness tests examining...

Table 4

Robustness tests examining potential effects of endogeneity

	(1)	(2)	(3)	(4)	(5)
	Lag of explanatory variables	2SLS	3SLS	GMM	Heckman model
Firm performance (lag)				0.41***
				(0.01)
Unrelated diversification	0.13***	0.71***	0.61***	0.25***	0.12***
	(0.03)	(0.27)	(0.12)	(0.02)	(0.05)
Unrelated divers. × Fin. constraint	0.69***	5.06**	3.41***	1.68***	0.60**
	(0.16)	(1.98)	(0.76)	(0.12)	(0.30)
Unrelated divers. × Industry ext. fin. depend.	0.04**	0.10*	0.05***	0.06***	0.06**
	(0.02)	(0.06)	(0.02)	(0.02)	(0.02)
Financial constraint	−0.97***	−3.13***	−4.44***	−2.05***	−1.66***
	(0.09)	(0.68)	(0.44)	(0.05)	(0.25)
Industry ext. financial dep.	−0.04***	−0.03	−0.00	−0.03***	−0.04**
	(0.01)	(0.02)	(0.02)	(0.01)	(0.02)
Listing	−0.00	−0.01	−0.00	−0.02***	−0.03***
	(0.01)	(0.01)	(0.00)	(0.00)	(0.01)
Ownership concentration	−0.01**	0.00	−0.02***	−0.07***	0.00
	(0.01)	(0.01)	(0.01)	(0.01)	(0.01)
Firm size	−0.01***	−0.02***	−0.02***	−0.00	−0.01****
	(0.00)	(0.01)	(0.00)	(0.00)	(0.00)
Industry growth opportunity	0.45***	0.59***	−0.21**	−0.06	−0.23
	(0.16)	(0.20)	(0.08)	(0.07)	(0.15)
Tangibility	−0.02	−0.05***	−0.04***	−0.05***	0.01
	(0.01)	(0.02)	(0.01)	(0.01)	(0.01)
Leverage	−0.03***	−0.03***	−0.03**	−0.08***	−0.11***
	(0.01)	(0.01)	(0.01)	(0.01)	(0.01)
GDP	−0.00	0.01**	0.03***	−0.00	0.02**
	(0.01)	(0.01)	(0.01)	(0.00)	(0.01)
Unemployment	−0.10**	−0.08	−0.01	−0.06***	0.06
	(0.05)	(0.07)	(0.07)	(0.02)	(0.11)
Constant	0.17		−1.01***	−0.15***	−0.40*
	(0.11)		(0.13)	(0.04)	(0.22)
Observations	2,101	2,089	2,256	1,975	2,399
R-squared	0.11	0.04	0.07
χ²			1091.93		321.37
Sargan test (p-value)		0.539
AR(2) (p-value)				0.496
Industry Fixed Effects	NO	NO	NO	NO	NO

	(1)	(2)	(3)	(4)	(5)
	Lag of explanatory variables	2SLS	3SLS	GMM	Heckman model
Firm performance (lag)				0.41***
				(0.01)
Unrelated diversification	0.13***	0.71***	0.61***	0.25***	0.12***
	(0.03)	(0.27)	(0.12)	(0.02)	(0.05)
Unrelated divers. × Fin. constraint	0.69***	5.06**	3.41***	1.68***	0.60**
	(0.16)	(1.98)	(0.76)	(0.12)	(0.30)
Unrelated divers. × Industry ext. fin. depend.	0.04**	0.10*	0.05***	0.06***	0.06**
	(0.02)	(0.06)	(0.02)	(0.02)	(0.02)
Financial constraint	−0.97***	−3.13***	−4.44***	−2.05***	−1.66***
	(0.09)	(0.68)	(0.44)	(0.05)	(0.25)
Industry ext. financial dep.	−0.04***	−0.03	−0.00	−0.03***	−0.04**
	(0.01)	(0.02)	(0.02)	(0.01)	(0.02)
Listing	−0.00	−0.01	−0.00	−0.02***	−0.03***
	(0.01)	(0.01)	(0.00)	(0.00)	(0.01)
Ownership concentration	−0.01**	0.00	−0.02***	−0.07***	0.00
	(0.01)	(0.01)	(0.01)	(0.01)	(0.01)
Firm size	−0.01***	−0.02***	−0.02***	−0.00	−0.01****
	(0.00)	(0.01)	(0.00)	(0.00)	(0.00)
Industry growth opportunity	0.45***	0.59***	−0.21**	−0.06	−0.23
	(0.16)	(0.20)	(0.08)	(0.07)	(0.15)
Tangibility	−0.02	−0.05***	−0.04***	−0.05***	0.01
	(0.01)	(0.02)	(0.01)	(0.01)	(0.01)
Leverage	−0.03***	−0.03***	−0.03**	−0.08***	−0.11***
	(0.01)	(0.01)	(0.01)	(0.01)	(0.01)
GDP	−0.00	0.01**	0.03***	−0.00	0.02**
	(0.01)	(0.01)	(0.01)	(0.00)	(0.01)
Unemployment	−0.10**	−0.08	−0.01	−0.06***	0.06
	(0.05)	(0.07)	(0.07)	(0.02)	(0.11)
Constant	0.17		−1.01***	−0.15***	−0.40*
	(0.11)		(0.13)	(0.04)	(0.22)
Observations	2,101	2,089	2,256	1,975	2,399
R-squared	0.11	0.04	0.07
χ²			1091.93		321.37
Sargan test (p-value)		0.539
AR(2) (p-value)				0.496
Industry Fixed Effects	NO	NO	NO	NO	NO

Note(s): Model (1) uses the one-year lag of all the explanatory variables. Model (2) uses an instrumental variables (IV) technique through the 2SLS approach. Model (3) involves a simultaneous system of equations model (3SLS) approach with two equations is applied, using firm performance and unrelated diversification respectively, as the dependent variables. Model (4) utilizes an IV approach using the GMM estimator. Finally, in Model (5) we test for sample selection bias using the Heckman technique. Standard errors in parentheses

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