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An Empirical Assessment of Empirical Corporate Finance

Published online by Cambridge University Press:  10 June 2022

Jeffrey L. Coles  and
Zhichuan F. Li Open the ORCID record for Zhichuan F. Li [Opens in a new window]
Jeffrey L. Coles
Affiliation:
University of Utah Eccles School of Business [email protected]
Zhichuan F. Li*
Affiliation:
University of Western Ontario Ivey Business School
*
[email protected] (corresponding author)
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Abstract

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We empirically evaluate 20 prominent contributions across a broad range of areas in the empirical corporate finance literature. We assemble the necessary data and apply a single, simple econometric method, the connected-groups approach of Abowd et al. to appraise the extent to which prevailing empirical specifications explain variation of the dependent variable, differ in composition of fit arising from various classes of independent variables, and exhibit resistance to omitted variable bias and other endogeneity problems. We assess empirical performance across a wide spectrum of areas in corporate finance and indicate varying research opportunities for empiricists and theorists.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 58 , Issue 4 , June 2023 , pp. 1391 - 1430
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank Ran Duchin (the very constructive referee), Jarrad Harford (the editor), and seminar participants at Arizona State University, the University of Western Ontario, the 2013 Northern Finance Association meetings, 2011 FMA 2011 (Assistant Professors’ Breakfast), 2013 FMA Asia meetings, and the keynote address at the 2019 FMA Europe meeting, as well as Campbell Harvey, for their helpful comments. We thank Yang Jie at the University of Utah for excellent, enabling research assistance.

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