Threshold Events and Identification: A Study of Cash Shortfalls

• 成果类型: Article
• 署名作者: Bakke, Tor-Erik; Whited, Toni M.
• 署名单位: University of Oklahoma System; University of Oklahoma - Norman; University of Rochester
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2012.01742.x
• 发表日期: 2012
• 页码: 1083-1111
• 关键词: investment

摘要

Threshold events are discrete events triggered when an observable continuous variable passes a known threshold. We demonstrate how to use threshold events as identification strategies by revisiting the evidence in Rauh (2006, Investment and financing constraints: Evidence from the funding of corporate pension plans, Journal of Finance 61, 3371) that mandatory pension contributions cause investment declines. Rauhs result stems from heavily underfunded firms that constitute a small fraction of the sample and that differ sharply from the rest of the sample. To alleviate this issue, we use observations near funding thresholds and find causal effects of mandatory contributions on receivables, R&D, and hiring, but not on investment. We also provide useful suggestions and diagnostics for analyzing threshold events.