The Trouble with Instruments: The Need for Pretreatment Balance in Shock-Based Instrumental Variable Designs
Published Online:6 Jul 2020https://doi.org/10.1287/mnsc.2019.3510
References
- (2003) Semiparametric instrumental variable estimation of treatment response models. J. Econometrics 113:231–263.Crossref, Google Scholar
- (2001) The colonial origins of comparative development: An empirical investigation. Amer. Econom. Rev. 91:1369–1401.Crossref, Google Scholar
- (2012) The changing of the boards: The impact on firm valuation of mandated female board representation. Quart. J. Econom. 127:137–197.Crossref, Google Scholar
- (2014) SOX, corporate transparence and the cost of debt. J. Banking Finance 38:145–165.Crossref, Google Scholar
- (2009) Mostly Harmless Econometrics: An Empiricist’s Companion (Princeton University Press, Princeton, NJ).Google Scholar
- (2015) Mastering Metrics: The Path from Cause to Effect (Princeton University Press, Princeton, NJ).Google Scholar
- (1996) Identification of causal effects using instrumental variables. J. Amer. Statist. Assoc. 91:444–455.Crossref, Google Scholar
- (2014) Do independent directors cause improvements in firm transparency? J. Financial Econom. 113:383–403.Crossref, Google Scholar
- (2016) Shock-based causal inference in corporate finance and accounting research. Critical Finance Rev. 5:207–304.Google Scholar
- (2014) Are small businesses worthy of financial aid? Evidence from a French targeted credit program. Rev. Finance 18:877–919.Crossref, Google Scholar
- (2012) Threshold events and identification: A study of cash shortfalls. J. Finance 67:1083–1111.Crossref, Google Scholar
- (2014) shaping liquidity: On the causal effects of voluntary disclosure. J. Finance 69:2237–2278.Crossref, Google Scholar
- (2010) Sarbanes-Oxley and corporate risk-taking. J. Accounting. Econom. 49:34–52.Crossref, Google Scholar
- (2007) Inside the family firm: The role of families in succession decisions and performance. Quart. J. Econom. 122:647–691.Crossref, Google Scholar
- (2016) From casual to causal inference in accounting research: The need for theoretical foundations. Foundations Trends Accounting 10:262–313.Google Scholar
- (2004) How much should we trust differences-in-differences estimates?. Quart. J. Econom. 119:249–275.Crossref, Google Scholar
- (2019) Breaking the glass ceiling? The effect of board quota on female labor market outcomes in Norway. Rev. of Econom. Stud. 86:191–239.Google Scholar
- (2019) The effect of health insurance on mortality: Statistical power what we can learn from the Affordable Care Act coverage expansions. NBER Working Paper No. 25568, National Bureau of Economic Research, Cambridge, MA.Google Scholar
- (2014) Does mandatory gender balance work? Changing organizational form to avoid board upheaval. J. Corporate Finance 28:152–168.Crossref, Google Scholar
- (2017) What’s your identification strategy? Innovation in corporate finance research. Management Sci. 63:2529–2548.Link, Google Scholar
- (2015) Does board independence reduce the cost of debt? Financial Management (Spring):15–47.Crossref, Google Scholar
- (2014) New evidence on the finite sample properties of propensity score reweighting and matching estimators. Rev. Econom. Statist. 96:885–897.Crossref, Google Scholar
- (2017) Board declassification and firm value: Have shareholders and boards really destroyed billions in value? Preprint, submitted September 1, http://dx.doi.org/10.2139/ssrn.2994559. Google Scholar
- (2018) Are U.S. cities underpoliced? Theory and evidence. Rev. Econom. Statist. 100:167–186.Crossref, Google Scholar
- (2017) Is economics research replicable? Sixty published papers from thirteen journals say “usually not.” Working paper, Federal Reserve Board, Washington, DC.Google Scholar
- (2007) Corporate governance and firm value: The impact of the 2002 governance rules. J. Finance 62:1789–1825.Crossref, Google Scholar
- (2011) The unintended effects of the Sarbanes-Oxley Act. J. Institutional Theoretical Econom. 167:149–164.Crossref, Google Scholar
- (2014) The Non-monotonic effect of board independence on credit ratings. J. Financial Services Res. 45:145–171.Crossref, Google Scholar
- (2015) Does increased board independence reduce earnings management? Evidence from recent regulatory reforms. Rev. Accounting Stud. 20:899–933.Crossref, Google Scholar
- (2012) Hiring cheerleaders: Board appointments of “independent” directors. Management Sci. 58:1039–1058.Link, Google Scholar
- (2014) Smart money? The effect of education on financial outcomes. Rev. Financial Stud. 27:2022–2051.Crossref, Google Scholar
- (2013) Monitoring managers: Does it matter? J. Finance 68:431–481.Crossref, Google Scholar
- (2009) Dealing with limited overlap in estimation of average treatment effects. Biometrika 96:187–199.Crossref, Google Scholar
- (2005) On the validity of econometric techniques with weak instruments: Inference on returns to education using compulsory school attendance laws. J. Human Resources 40:393–410.Crossref, Google Scholar
- (2014) Board changes and CEO turnover: The unanticipated effects of the Sarbanes-Oxley Act. J. Banking Finance 41:97–108.Crossref, Google Scholar
- (2007) Board composition, corporate performance and the cadbury committee recommendation. J. Financial Quant. Anal. 42:535–564.Crossref, Google Scholar
- (2013) Diversity among norwegian boards of directors: Does a quota for women improve firm performance? Female Econom. 19:110–135.Crossref, Google Scholar
- (2012) Bank bailouts and moral hazard: Evidence from Germany. Rev. Financial Stud. 25(8):2343–2380.Crossref, Google Scholar
- (2009) Corporate tax avoidance and firm value. Rev. Econom. Statist. 91:537–546.Crossref, Google Scholar
- (2016) Estimating firms’ responses to securities regulation using a bunching approach. Preprint, submitted October 31, http://dx.doi.org/10.2139/ssrn.2817151.Google Scholar
- (2011) Watch what I do, not what I say: The unintended consequences of the homeland investment act. J. Finance 66:753–787.Crossref, Google Scholar
- (2016) The effect of governance reforms on financial reporting fraud. J. Law Finance Accounting 1(2):1–40.Google Scholar
- (2010) When are outside directors effective? J. Financial Econom. 95:195–214.Crossref, Google Scholar
- (2015) Comments on “The trouble with instruments: Re-examining shock-IV designs” by Atanasov and Black. Preprint, submitted November 22, http://dx.doi.org/10.2139/ssrn.2697098.Google Scholar
- (2016) How costly is forced gender-balancing of corporate boards. Working paper, European Corporate Governance Institute, Brussels, Belgium.Google Scholar
- (2014) Endogenous selection bias: The problem of conditioning on a collider variable. Annual Rev. Sociol. 40:31–53.Crossref, Google Scholar
- (2012) External networking and internal firm governance. J. Finance 67(1):153–194.Crossref, Google Scholar
- (2002) Principal stratification in causal inference. Biometrics 58:21–29.Crossref, Google Scholar
- (2014) The effect of disability insurance receipt on labor supply. Amer. Econom. J. Policy 6:291–337.Google Scholar
- (2011) Identification of models of the labor market. Handbook Labor Econom. 4:537–617.Google Scholar
- (2009) Unintended consequences of granting small firms exemptions from securities regulation: Evidence from the Sarbanes-Oxley Act. J. Accounting Res. 47:459–506.Crossref, Google Scholar
- (2017) Benefits and costs of Sarbanes-Oxley Section 404(b) exemption: Evidence from small firms’ internal control disclosures. J. Accounting Econom. 63:358–384.Google Scholar
- (2013) Identifying the valuation effects and agency costs of corporate diversification: Evidence from the geographic diversification of U.S. banks. Rev. Financial Stud. 26:1788–1823.Crossref, Google Scholar
- (2016) Causal inference in accounting research. J. Accounting Res. 54:477–523.Crossref, Google Scholar
- (2011) A review of empirical capital structure research and directions for the future. Annual Rev. Financial Econom. 3:309–345.Crossref, Google Scholar
- (2019) Panel data estimation in finance: Testable assumptions and parameter (in)consistency. J. Financial Quant. Anal. 54(1):1–29.Crossref, Google Scholar
- (2017) The effects of removing barriers to equity issuance. J. Financial Econom. 124:580–598.Crossref, Google Scholar
- (2005) Structural equations, treatment effects, and econometric policy evaluation. Econometrica 73:669–738.Crossref, Google Scholar
- (2006) Understanding instrumental variables with essential heterogeneity. Rev. Econom. Statist. 88:389–432.Crossref, Google Scholar
- Does algorithmic trading improve liquidity? J. of Finance 66: 1–33.Google Scholar
- (2007) Matching as nonparametric preprocessing for reducing model dependence in parametric causal inference. Political Anal. 15:199–236.Crossref, Google Scholar
- (2012) Causal inference without balance checking: Coarsened exact matching. Political Anal. 20:1–24.Crossref, Google Scholar
- (2010) The effect of SOX Section 404: Costs, earnings quality, and stock prices. J. Finance 65:1163–1196.Crossref, Google Scholar
- (2005) Robust, accurate confidence intervals with a weak instrument: Quarter of birth and education. J. Royal Statist. Soc. Ser. A 168:109–126.Crossref, Google Scholar
- (2015) Causal Inference for Statistics, Social, and Biomedical Sciences: An Introduction (Cambridge University Press, New York).Crossref, Google Scholar
- (2009) Recent developments in the econometrics of program evaluation. J. Econom. Literature 47:5–86.Crossref, Google Scholar
- (2017) Have instrumental variables brought us closer to the truth. Rev. Corporate Finance Stud. 6:127–140.Google Scholar
- (2017) Did the 1999 NYSE and NASDAQ listing standard changes on audit committee composition benefit investors. Accounting Rev. 92:187–212.Crossref, Google Scholar
- (2011) Do control effectiveness disclosures require SOX 404(b) internal control audits? A natural experiment with small U.S. public companies. J. Accounting Res. 49:413–448.Crossref, Google Scholar
- (1998) Law and finance. J. Political Econom. 106:1113–1155.Crossref, Google Scholar
- (2010) On the use of instrumental variables in accounting research. J. Accounting Econom. 49:186–205.Crossref, Google Scholar
- (2014) Did regulation fair disclosure, SOX, and other analyst regulations reduce security mispricing. J. Accounting Res. 52:733–774.Crossref, Google Scholar
- (2016) The SEC’s busted randomized experiment: What can and cannot be learned. Preprint, submitted August 8, http://dx.doi.org/10.2139/ssrn.2820031.Google Scholar
- (2013) A female style in corporate leadership? Evidence from quotas. Amer. Econom. J. Appl. Econom. 5:136–169.Crossref, Google Scholar
- (2016) Does governance regulation curb financial misreporting? Evidence from accounting misstatements following board independence listing requirements. Working paper, Warrington School of Business, University of Florida, Gainesville. Google Scholar
- (2014) Counterfactuals and Causal Inference: Methods and Principles for Social Research, 2nd ed. (Cambridge University Press, Cambridge, UK).Crossref, Google Scholar
- (2009) Causality: Models, Reasoning, and Inference, 2nd ed. (Cambridge University Press, Cambridge, UK).Crossref, Google Scholar
- (2009) Estimating standard errors in finance panel data sets: Comparing approaches. Rev. Financial Stud. 22:435–480.Crossref, Google Scholar
- (2013) Endogeneity in empirical corporate finance. Constantinides GM, Harris M, Stulz RM, eds. Handbook of the Economics of Finance, vol. 2A (North Holland, Amsterdam), 493–572.Crossref, Google Scholar
- (2009) Design of Observational Studies (Springer, New York).Google Scholar
- (2000) Natural ‘natural experiments’ in economics. J. Econom. Literature 38:827–874.Crossref, Google Scholar
- (2008) For objective causal inference, design trumps analysis. Ann. Appl. Statist. 2:808–840.Crossref, Google Scholar
- (2011) Instrumental variables estimation in political science: A reader’s guide. Amer. J. Political Sci. 55:188–200.Crossref, Google Scholar
- (2002) A survey of weak instruments and weak identification in generalized method of moments. J. Bus. Econom. Statist. 20:518–529.Crossref, Google Scholar
- (2015) The effect of succession taxes on family firm investment: Evidence from a natural experiment. J. Finance 70:649–688.Crossref, Google Scholar
- (2019) The debt-equity choice when regulatory thresholds are based on equity values: Evidence from SOX 404. Preprint, submitted May 23, http://dx.doi.org/10.2139/ssrn.2675366.Google Scholar
- (2010) Econometric Analysis of Cross Section and Panel Data (MIT Press, Cambridge, MA).Google Scholar
- (2018) Consistency without inference: Instrumental variables in practical application. Working paper, London School of Economics, London.Google Scholar

