Table 5 Robustness test (1) (2) (3) (1)...

Table 5

Robustness test

	(1)	(2)	(3)	(1)	(2)	(3)
	Panel A: Alternative proxy of default risk			Panel B: Alternative estimation technique
Dependent variable	Z_score	Z_score	Z_score	DD	DD	DD
DIR	−0.006***			−0.002**
DIR	(−4.231)			(−2.794)
CEOIR		−0.010***			−0.004***
CEOIR		(−5.447)			(−3.533)
EMPIR			−0.036***			−0.024***
EMPIR			(−5.227)			(−3.363)
LNS	−0.115***	−0.023	−0.116***	0.200***	0.176***	0.198***
LNS	(−3.824)	(−0.683)	(−3.842)	(7.146)	(6.649)	(7.388)
K/S	−0.224***	−0.153*	−0.218***	1.047***	1.030***	1.030***
K/S	(−3.104)	(−1.958)	(−3.014)	(17.819)	(15.866)	(17.234)
Y/S	1.147***	1.028***	1.149***	5.199***	5.073***	5.094***
Y/S	(5.966)	(5.109)	(5.974)	(15.927)	(15.416)	(16.058)
R&D/K	0.006	0.003	0.006	0.076***	0.052***	0.073***
R&D/K	(1.419)	(0.646)	(1.419)	(3.812)	(3.930)	(3.884)
RDUM	0.244	0.125	0.248	0.949***	1.036***	0.993**
RDUM	(0.350)	(0.141)	(0.355)	(3.228)	(3.163)	(2.961)
I/K	0.072***	0.043*	0.072***	−0.315***	−0.309***	−0.364***
I/K	(3.243)	(1.951)	(3.241)	(−4.024)	(−3.509)	(−4.484)
ROA	0.085***	0.079***	0.085***	0.036***	0.036***	0.035***
ROA	(47.711)	(42.392)	(47.550)	(5.700)	(5.008)	(5.693)
LEVERAGE	−4.245***	−4.284***	−4.233***	−5.753***	−5.764***	−5.789***
LEVERAGE	(−40.664)	(−37.427)	(−40.466)	(−18.600)	(−16.311)	(−18.502)
Age	−0.386***	−0.184***	−0.353***	−0.137***	−0.154***	−0.120***
Age	(−12.523)	(−5.016)	(−12.099)	(−4.371)	(−4.565)	(−3.809)
Constant	5.811***	4.392***	5.768***	2.043***	2.276***	2.047***
Constant	(7.568)	(4.566)	(7.514)	(6.032)	(6.592)	(7.020)
Observations	32,416	28,583	32,438	36,120	31,621	36,156
R-squared	0.806	0.816	0.806	0.341	0.331	0.332
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Year effects	Yes	Yes	Yes	Yes	Yes	Yes

	(1)	(2)	(3)	(1)	(2)	(3)
	Panel A: Alternative proxy of default risk			Panel B: Alternative estimation technique
Dependent variable	Z_score	Z_score	Z_score	DD	DD	DD
DIR	−0.006***			−0.002**
DIR	(−4.231)			(−2.794)
CEOIR		−0.010***			−0.004***
CEOIR		(−5.447)			(−3.533)
EMPIR			−0.036***			−0.024***
EMPIR			(−5.227)			(−3.363)
LNS	−0.115***	−0.023	−0.116***	0.200***	0.176***	0.198***
LNS	(−3.824)	(−0.683)	(−3.842)	(7.146)	(6.649)	(7.388)
K/S	−0.224***	−0.153*	−0.218***	1.047***	1.030***	1.030***
K/S	(−3.104)	(−1.958)	(−3.014)	(17.819)	(15.866)	(17.234)
Y/S	1.147***	1.028***	1.149***	5.199***	5.073***	5.094***
Y/S	(5.966)	(5.109)	(5.974)	(15.927)	(15.416)	(16.058)
R&D/K	0.006	0.003	0.006	0.076***	0.052***	0.073***
R&D/K	(1.419)	(0.646)	(1.419)	(3.812)	(3.930)	(3.884)
RDUM	0.244	0.125	0.248	0.949***	1.036***	0.993**
RDUM	(0.350)	(0.141)	(0.355)	(3.228)	(3.163)	(2.961)
I/K	0.072***	0.043*	0.072***	−0.315***	−0.309***	−0.364***
I/K	(3.243)	(1.951)	(3.241)	(−4.024)	(−3.509)	(−4.484)
ROA	0.085***	0.079***	0.085***	0.036***	0.036***	0.035***
ROA	(47.711)	(42.392)	(47.550)	(5.700)	(5.008)	(5.693)
LEVERAGE	−4.245***	−4.284***	−4.233***	−5.753***	−5.764***	−5.789***
LEVERAGE	(−40.664)	(−37.427)	(−40.466)	(−18.600)	(−16.311)	(−18.502)
Age	−0.386***	−0.184***	−0.353***	−0.137***	−0.154***	−0.120***
Age	(−12.523)	(−5.016)	(−12.099)	(−4.371)	(−4.565)	(−3.809)
Constant	5.811***	4.392***	5.768***	2.043***	2.276***	2.047***
Constant	(7.568)	(4.566)	(7.514)	(6.032)	(6.592)	(7.020)
Observations	32,416	28,583	32,438	36,120	31,621	36,156
R-squared	0.806	0.816	0.806	0.341	0.331	0.332
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Year effects	Yes	Yes	Yes	Yes	Yes	Yes

Note(s): Panel A of Table 5 presents results for analyzing the effect of insider ownership on firm default risk using DD spread as a proxy of default risk. The dependent variable is Altman Z-score. Panel B of Table 5 provides the results of regression analyzing the effect of insider ownership on firm default risk using Fama and Macbath (1973) as an alternative estimation technique. The dependent variable is DD. T-statistics are in parentheses. Definitions of all variables are provided in Appendix. Superscripts ***, ** and * denote statistical significance at 1, 5 and 10% level, respectively

Source(s): Table created by the authors

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