Using and Interpreting Fixed Effects Models

• 成果类型: Article
• 署名作者: Breuer, Matthias; Dehaan, Ed
• 署名单位: Columbia University; Stanford University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12559
• 发表日期: 2024
• 页码: 1183-1226
• 关键词: sarbanes-oxley act; instrumental variables; bartik instruments; ifrs adoption; time-series; panel-data; earnings; CONSEQUENCES; SUGGESTIONS; disclosure

摘要

Fixed effects (FE) have emerged as a ubiquitous and powerful tool for eliminating unwanted variation in observational accounting studies. Unwanted variation is plentiful in accounting research because we often use rich data to test precise hypotheses derived from abstract theories. By eliminating unwanted variation, FE reduce concerns that omitted variables bias our estimates or weaken test power. FE are not costless, though, so their use should be carefully justified by theoretical and institutional considerations. FE also transform samples and variables in ways that are not immediately apparent, and in doing so affect how we should interpret regression results. This primer explains the mechanics of FE and provides practical guidance for the informed use, transparent reporting, and careful interpretation of FE models.