Table 4 Instrumental variable analysis...

Table 4

Instrumental variable analysis

	(1)	(2)	(3)
Stage	1st	2nd	2nd
Variables	Total delay	Restate	Ln(Audit fee)
Wind speed	0.013***
Wind speed	[15.88]
Cloud cover	0.006***
Cloud cover	[7.33]
Precipitation	0.005***
Precipitation	[9.68]
Estimated total delay		−4.914***	0.641**
Estimated total delay		[−2.59]	[2.11]
Big4	−0.001	0.130**	0.373***
Big4	[−0.63]	[2.12]	[35.35]
ROA	−0.018**	−0.482	−1.002***
ROA	[−2.51]	[−1.55]	[−18.22]
Loss	−0.003*	−0.224***	−0.010
Loss	[−1.72]	[−2.98]	[−0.75]
Ln(Size)	0.002***	0.112***	0.484***
Ln(Size)	[6.82]	[7.55]	[185.30]
Leverage	0.004*	0.236**	0.033**
Leverage	[1.70]	[2.54]	[2.04]
Book-to-market	0.000	0.054***	−0.009***
Book-to-market	[0.87]	[3.70]	[−3.71]
Receivable	0.012**	0.139	0.729***
Receivable	[2.55]	[0.72]	[20.68]
Inventory	0.000	−0.200	0.367***
Inventory	[0.05]	[−0.83]	[8.56]
Busy	0.002	−0.395***	0.050***
Busy	[1.34]	[−8.03]	[5.48]
Auditor change	0.002	0.023	−0.294***
Auditor change	[0.99]	[0.30]	[−21.33]
Debt	−0.000	−0.003	0.037***
Debt	[−0.08]	[−0.26]	[22.16]
Unqualified opinion	−0.002*	0.003	−0.101***
Unqualified opinion	[−1.72]	[0.07]	[−11.92]
Major exchange	−0.004***	−0.247***	0.026**
Major exchange	[−2.91]	[−4.06]	[2.36]
Restatement	−0.006***	3.236***	0.058***
Restatement	[−3.39]	[52.57]	[4.38]
Internal control weakness	0.001	1.108***	0.153***
Internal control weakness	[0.46]	[17.57]	[12.30]
Auditor tenure	−0.001***	−0.011	0.001
Auditor tenure	[−3.36]	[−1.49]	[0.44]
The net tone in 10K	−0.243**	−15.716***	−15.817***
The net tone in 10K	[−2.00]	[−3.02]	[−17.42]
Constant	0.090***	−0.568	10.335***
Constant	[17.21]	[−1.15]	[132.61]
Year FE	YES	YES	YES
Industry FE	YES	YES	YES
Observations	25,789	25,789	25,789
Pseudo/Adjusted R²	0.246	0.250	0.852
Wald F-statistics	196.464
p-value	0.000
Sargan–Hansen test	0.531
p-value	0.758

	(1)	(2)	(3)
Stage	1st	2nd	2nd
Variables	Total delay	Restate	Ln(Audit fee)
Wind speed	0.013***
Wind speed	[15.88]
Cloud cover	0.006***
Cloud cover	[7.33]
Precipitation	0.005***
Precipitation	[9.68]
Estimated total delay		−4.914***	0.641**
Estimated total delay		[−2.59]	[2.11]
Big4	−0.001	0.130**	0.373***
Big4	[−0.63]	[2.12]	[35.35]
ROA	−0.018**	−0.482	−1.002***
ROA	[−2.51]	[−1.55]	[−18.22]
Loss	−0.003*	−0.224***	−0.010
Loss	[−1.72]	[−2.98]	[−0.75]
Ln(Size)	0.002***	0.112***	0.484***
Ln(Size)	[6.82]	[7.55]	[185.30]
Leverage	0.004*	0.236**	0.033**
Leverage	[1.70]	[2.54]	[2.04]
Book-to-market	0.000	0.054***	−0.009***
Book-to-market	[0.87]	[3.70]	[−3.71]
Receivable	0.012**	0.139	0.729***
Receivable	[2.55]	[0.72]	[20.68]
Inventory	0.000	−0.200	0.367***
Inventory	[0.05]	[−0.83]	[8.56]
Busy	0.002	−0.395***	0.050***
Busy	[1.34]	[−8.03]	[5.48]
Auditor change	0.002	0.023	−0.294***
Auditor change	[0.99]	[0.30]	[−21.33]
Debt	−0.000	−0.003	0.037***
Debt	[−0.08]	[−0.26]	[22.16]
Unqualified opinion	−0.002*	0.003	−0.101***
Unqualified opinion	[−1.72]	[0.07]	[−11.92]
Major exchange	−0.004***	−0.247***	0.026**
Major exchange	[−2.91]	[−4.06]	[2.36]
Restatement	−0.006***	3.236***	0.058***
Restatement	[−3.39]	[52.57]	[4.38]
Internal control weakness	0.001	1.108***	0.153***
Internal control weakness	[0.46]	[17.57]	[12.30]
Auditor tenure	−0.001***	−0.011	0.001
Auditor tenure	[−3.36]	[−1.49]	[0.44]
The net tone in 10K	−0.243**	−15.716***	−15.817***
The net tone in 10K	[−2.00]	[−3.02]	[−17.42]
Constant	0.090***	−0.568	10.335***
Constant	[17.21]	[−1.15]	[132.61]
Year FE	YES	YES	YES
Industry FE	YES	YES	YES
Observations	25,789	25,789	25,789
Pseudo/Adjusted R²	0.246	0.250	0.852
Wald F-statistics	196.464
p-value	0.000
Sargan–Hansen test	0.531
p-value	0.758

Note(s): This table shows multiple regression results for the relationship between flight delay and audit effort based on instrumental variable method. Column (1) reports the results for our first-stage regression. The remaining two columns present our main regression results by using the value we generated in the first stage. We add control variables, which are described in Appendix, in columns (2) and (4). Standard errors are clustered by firm and t-statistics are shown in parentheses. Significance level: ***p < 0.01, **p < 0.05, *p < 0.1

Source(s): Table by authors

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