Selection Models in Accounting Research

Lennox, Clive S.; Francis, Jere R.; Wang, Zi‐Tian

doi:10.2308/accr-10195

Cited by 1,056 publications

(496 citation statements)

References 99 publications

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“…This can happen irrespective of the inverse Mills' ratio being significant or not and will be even more apparent if we include all variables in the probit regression. Similar findings are in Lennox et al (2012).…”

Section: Motivating Studiessupporting

confidence: 87%

Uncertainty intervals for regression parameters with non-ignorable missingness in the outcome

2014

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When estimating regression models with missing outcomes, scientists usually have to rely either on a missing at random assumption (missing mechanism is independent from the outcome given the observed variables) or on exclusion restrictions (some of the covariates affecting the missingness mechanism do not affect the outcome). Both these hypotheses are controversial in applications since they are typically not testable from the data. The alternative, which we pursue here, is to derive identification sets (instead of point identification) for the parameters of interest when allowing for a missing not at random mechanism. The non-ignorability of this mechanism is quantified with a parameter. When the latter can be bounded with a priori information, a bounded identification set follows. Our approach allows the outcome to be continuous and unbounded and relax distributional assumptions. Estimation of the identification sets can be performed via ordinary least squares and sampling variability can be incorporated yielding uncertainty intervals achieving a coverage of at least (1 − α) probability. Our work is motivated by a study on predictors of body mass index (BMI) change in middle age men allowing us to identify possible predictors of BMI change even when assuming little on the missing mechanism.

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Section: Motivating Studiessupporting

confidence: 87%

Uncertainty intervals for regression parameters with non-ignorable missingness in the outcome

2014

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“…The results suggest that the main results in Table 4 are likely to be affected by the selection problem. The results are consistent with recent concerns regarding the selection problem in audit research (Lennox et al, 2012). In this table, we address the selection problem by using Heckman's two-stage least square approach.…”

Section: The Us Samplesupporting

confidence: 86%

“…The selection bias problem in audit research has attracted increasing concerns in recent years (Lennox et al, 2012). 4 To address the potential self-selection concern, we The table reports the regression results concerning the relationship between Big N and ERC in the preand post-SOX eras.…”

Section: The Us Samplementioning

confidence: 99%

Big N Auditors and Earnings Response Coefficients – A Comparison Study between the US and China*

Zhou

2014

China Account Financ Rev

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industry in the US and China. Building on the seminal work of Teoh and Wong (1993), this essay revisits the tests of the prediction that earnings reports audited by larger audit firms have higher earnings response coefficients (ERCs). Specifically, we investigate whether the positive association between ERCs and perceived audit quality holds in either the US or China using long-term historical data. Empirical analysis based on US data from 1984 to 2012 shows that the ERCs of Big N clients are generally higher than those of non-Big N clients, but such differences have dissipated since 2002, the year the Sarbanes-Oxley Act (SOX) came into effect. However, we find weak evidence in China during 1995 to 2012 that Chinese investors value the credibility of large international auditors. The results also reveal that the relationship between Big N and ERCs is stronger in the US than in China. Overall, our results show that auditor reputation is valued by investors in more developed markets, indicating that both institutional and industry structure affect the relationship between Big N and ERCs.

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“…In our study, it is possible that foreign directors do not randomly join Nordic firms but, rather, self-select firms. To overcome this possible endogeneity bias, we follow prior research and use an instrumental variable (IV) approach where we estimate earnings management regressions in a two-stage least square (2SLS) framework (Larcker & Rusticus, 2010;Lennox, Francis & Wang, 2012). Consistent with Masulis et al (2012) we use distance of headquarters to airport 15 (DISTANCE_TO_AIRPORT) as our first instrument.…”

Section: Instrumental Variables Approachmentioning

confidence: 99%

The Impact of Board Internationalization on Earnings Management

et al. 2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTPrior literature shows that choices regarding board composition are associated with earnings management. We add to this literature by examining the effects of the presence of a foreign board member on earnings management. Using a sample of 3,249 firm-year observations representing 586 non-financial listed Nordic firms during 2001-2008, we find that the presence of a non-Nordic, foreign director is associated with significantly higher levels of earnings management. Moreover, we provide preliminary evidence that differences in accounting knowledge drive this effect. Our results suggest that it may not necessarily be beneficial to appoint a foreign director to the board.

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Selection Models in Accounting Research

Cited by 1,056 publications

References 99 publications

Uncertainty intervals for regression parameters with non-ignorable missingness in the outcome

Uncertainty intervals for regression parameters with non-ignorable missingness in the outcome

Big N Auditors and Earnings Response Coefficients – A Comparison Study between the US and China*

The Impact of Board Internationalization on Earnings Management

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