Identification strategies
| Lead DV | Fixed effects | System GMM | Propensity score matching (PSM) | |||
|---|---|---|---|---|---|---|
| Pre-match probit | Post-Match probit | Pooled OLS | ||||
| Variables | (1) | (2) | (3) | (4) | (5) | (6) |
| ROA | ROAt+1 | CGCI_UW_DUMMY | ROA | |||
| ROAt | – | – | 0.925*** (0.190) | – | – | – |
| CGCI_UW | 0.042*** (0.016) | 0.036*** (0.013) | 0.229*** (0.073) | – | – | 0.049*** (0.016) |
| DTA | −0.121*** (0.012) | −0.190*** (0.014) | −0.033 (0.109) | 0.073 (0.182) | 0.296 (0.249) | −0.164*** (0.015) |
| Constant | −0.304** (0.149) | 0.006 (0.162) | 1.607* (0.862) | −4.337** (1.936) | 0.013 (0.026) | −0.348* (0.182) |
| All controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Observations | 1,662 | 1,838 | 2,314 | 1,700 | 1,357 | 1,694 |
| Industry | No | Yes | Yes | Yes | Yes | Yes |
| Year | No | Yes | Yes | Yes | Yes | Yes |
| Adjusted R2 | 0.278 | 0.329 | 0.519 | – | – | – |
| Pseudo R2 | – | – | – | 0.043 | 0.023 | 0.409 |
| F-statistics | 81.25 | 60.25 | 79.37 | – | – | 35.59 |
| AR1 (p-value) | – | – | 0.000 | – | – | – |
| Sargan (p-value) | – | – | 0.021 | – | – | – |
| Hansen-J | – | – | 0.302 | – | – | – |
| Lead DV | Fixed effects | System GMM | Propensity score matching (PSM) | |||
|---|---|---|---|---|---|---|
| Pre-match | Post-Match | Pooled OLS | ||||
| Variables | (1) | (2) | (3) | (4) | (5) | (6) |
| ROA | ROAt+1 | CGCI_UW_DUMMY | ROA | |||
| – | – | 0.925 | – | – | – | |
| 0.042 | 0.036 | 0.229 | – | – | 0.049 | |
| −0.121 | −0.190 | −0.033 (0.109) | 0.073 (0.182) | 0.296 (0.249) | −0.164 | |
| Constant | −0.304 | 0.006 (0.162) | 1.607 | −4.337 | 0.013 (0.026) | −0.348 |
| All controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Observations | 1,662 | 1,838 | 2,314 | 1,700 | 1,357 | 1,694 |
| Industry | No | Yes | Yes | Yes | Yes | Yes |
| Year | No | Yes | Yes | Yes | Yes | Yes |
| Adjusted | 0.278 | 0.329 | 0.519 | – | – | – |
| Pseudo | – | – | – | 0.043 | 0.023 | 0.409 |
| F-statistics | 81.25 | 60.25 | 79.37 | – | – | 35.59 |
| AR1 ( | – | – | 0.000 | – | – | – |
| Sargan ( | – | – | 0.021 | – | – | – |
| Hansen- | – | – | 0.302 | – | – | – |
Notes:
This table presents results for the relationship between corporate governance compliance, profitability and capital structure using different identification strategies; Model 1 replaces the standard proxy of firm profitability (ROA) with a one-year leading value (ROA)t+1 to address the issue of reverse causality; Model 2 presents the results using firm fixed-effects to consider the issue of omitted variables-bias; Model 3 presents results for the relationship between CG compliance and FP with CS mediation using a system GMM estimation; Models 4 and 5 report the results of pre- and post-match probit regressions where the dependent variable CGCI_UW_DUMMY is coded 1 if CGCI_UW is greater than the industry-year average of CGCI_UW and 0 otherwise; Model 6 presents results using matched samples; the standard errors are reported in parentheses; ***, ** and * denote significance at the 1, 5 and 10% levels, respectively
Sharing content requires targeting cookies to be enabled. Please update your cookie preferences to use this feature.