Propensity Score Matching in Accounting Research

2016 ◽  
Vol 92 (1) ◽  
pp. 213-244 ◽  
Author(s):  
Jonathan E. Shipman ◽  
Quinn T. Swanquist ◽  
Robert L. Whited
Keyword(s):  
Propensity Score ◽  
Propensity Score Matching ◽  
Multiple Regression ◽  
Effect Size ◽  
Data Availability ◽  
Future Research ◽  
Accounting Research ◽  
Sample Composition ◽  
Average Treatment Effects ◽  
Important Design

ABSTRACT Propensity score matching (PSM) has become a popular technique for estimating average treatment effects (ATEs) in accounting research. In this study, we discuss the usefulness and limitations of PSM relative to more traditional multiple regression (MR) analysis. We discuss several PSM design choices and review the use of PSM in 86 articles in leading accounting journals from 2008–2014. We document a significant increase in the use of PSM from zero studies in 2008 to 26 studies in 2014. However, studies often oversell the capabilities of PSM, fail to disclose important design choices, and/or implement PSM in a theoretically inconsistent manner. We then empirically illustrate complications associated with PSM in three accounting research settings. We first demonstrate that when the treatment is not binary, PSM tends to confine analyses to a subsample of observations where the effect size is likely to be smallest. We also show that seemingly innocuous design choices greatly influence sample composition and estimates of the ATE. We conclude with suggestions for future research considering the use of matching methods. Data Availability: All data used are available from sources cited in the text.

scholarly journals The Effects of Employment on Depression and Life Satisfaction Among Old-Aged Using the DD Method Combined With PSM

2020 ◽  
Vol 4 (Supplement_1) ◽  
pp. 408-408
Author(s):  
Si Young Song ◽  
Hey Jung Jun ◽  
Sun Ah Lee
Keyword(s):  
Life Satisfaction ◽  
Propensity Score ◽  
Propensity Score Matching ◽  
Multiple Regression ◽  
Propensity Scores ◽  
Panel Study ◽  
Double Difference ◽  
Combined Model ◽  
Comparative Group ◽  
Experimental Group

Abstract The purpose of this study is to explore the effect of employment on depression and life satisfaction among old-aged. Using 12th (2017) wave and 13th (2018) wave of Korean Welfare Panel Study (KoWePS), three stages of analyses were conducted. First, through propensity score matching (PSM) method, sample with similar propensity scores was matched between the group that did not work in 12th wave but worked in 13th wave (experimental group, N=180), and the group that did not work in 12th and 13th wave (comparative group, N=180). Second, the matched sample was used to conduct multiple regression analysis with the group dummy variable (experimental group, comparative group) as an independent variable, and depression and life satisfaction as the dependent variables. Third, combined model of propensity score matching (PSM) and double difference (DD) method was conducted to more appropriately derive the net effect of employment. The results of multiple regression after propensity matching showed that employment had a positive effect on reducing depression (B= -1.70, p< .01) and increasing life satisfaction (B= .12, p< .01) in old-aged. Furthermore, in combined model of PSM and DD, life satisfaction was improved when employed compared to non-employed (B= .15, p< .05). The results of this study are meaningful in that the meaning of employment in old-aged is more clearly derived by solving selection bias and endogenous problems. Also, this study may provide reference for establishing welfare policies related to employment among old-aged.

CSR in developing countries – the importance of good governance and economic growth: evidence from Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Murumba Inekwe ◽  
Fathyah Hashim ◽  
Sofri B. Yahya
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Effect Size ◽  
Good Governance ◽  
Substantial Effect ◽  
Data Availability ◽  
Future Research ◽  
Content Type ◽  
Small Effect Size ◽  
Interval Ratio

Purpose The purpose of this study is to examine the effect of public governance and economic growth on corporate social responsibility (CSR) performance in Egypt, Morocco, Mauritius, Nigeria and South Africa. It also assesses the trend of CSR performance in these countries over time. Design/methodology/approach The study is based on a sample of five countries in Africa for the period 2012-2017. The multivariate regression model was used in testing the research questions/hypotheses. Robustness tests were performed to provide evidence to strengthen the findings of the study. Findings Findings suggest that both good governance and economic growth are significantly positively associated with CSR performance. However, while good governance has a relatively substantial effect size, economic growth has a small effect size. Overall, both variables have a considerably low confidence interval ratio and therefore stand a good chance of holding up in future research. Research limitations/implications The analysis is limited to within-country effects, thereby forgoing the opportunity to explain between-countries effects. Second, the sample size is relatively small because of the limitation of data availability on CSR in Africa; hence, population generalization is not intended but theory generalization. Practical implications Findings have implications for studies on CSR performance in Africa that fail to consider the socio-political and socio-economic level of development as contextual variables in the research design. Originality/value Prior studies on CSR have focused majorly on CSR performance–corporate financial performance relationship. Furthermore, there are several calls in the literature for research for a new direction on CSR in the context of developing countries, especially Africa. This paper responds to these literature gaps.

scholarly journals Retirement? Other Ways Out of the Labour Market Are Far More Worrying for Health: Results from a Matching Approach Study

2021 ◽  
pp. 089826432110396
Author(s):  
Elena Pirani ◽  
Gustavo De Santis ◽  
Francesca Zanasi
Keyword(s):  
Propensity Score ◽  
Longitudinal Data ◽  
Health Outcomes ◽  
Labour Market ◽  
Propensity Score Matching ◽  
Individual Heterogeneity ◽  
Future Research ◽  
Growing Body

Objective Despite a growing body of research, the effects of retirement on health are not clear. The study explores the role played by the path out of the labour market (formal retirement vs. unemployment or family reasons), accounting for individual heterogeneity. Methods: Propensity score matching approach is employed on longitudinal data from the Survey of Health, Ageing and Retirement in Europe (2004–2015). Results: While health does not change significantly for those who formally retire, it worsens considerably for those who leave the labour market for other reasons. Moreover, health outcomes turn out to be highly heterogeneous, depending on individual socio-economic and job-related characteristics. Discussion: Leaving the labour market in one’s mature years is a complex transition. Future research should focus on understanding and combating the causes of premature exit from the labour market, a relevant concern both in economic terms and on health grounds, in the light of our results.

Corporations May Hire More People With Disabilities Through Public Employment Support Services: Propensity Score Matching Analysis

2018 ◽  
Vol 62 (4) ◽  
pp. 243-252
Author(s):  
Won Ho Kim ◽  
JeeEun Karin Nam
Keyword(s):  
Propensity Score ◽  
Propensity Score Matching ◽  
Support Services ◽  
People With Disabilities ◽  
Severe Disabilities ◽  
Future Research ◽  
Persons With Disabilities ◽  
Employment Agency ◽  
Propensity Score Matching Analysis ◽  
Employment Support

This study investigated the effectiveness of employment support services provided to organizations in the context of the quota policies for hiring people with disabilities (PWD). Empirical analyses using the propensity score matching method were conducted on a representative sample of organizations in South Korea that had utilized the PWD employment support services offered by the Korea Employment Agency for the Disabled. In short, the employment support services provided to organizations appeared to be effective in enhancing employment of PWD. Specifically, the organizations that received the PWD employment support services (a) had a higher probability of hiring persons with disabilities, (b) fulfilled the mandated quota for PWD better, and (c) hired more individuals with severe disabilities compared with the organizations that did not receive such services. Implications and limitations of this study and directions for future research are discussed.

Isolating the effect of eviction on criminal convictions

2017 ◽  
Vol 61 (3) ◽  
pp. 263-282 ◽  
Author(s):  
Susanne Alm
Keyword(s):  
Propensity Score ◽  
Propensity Score Matching ◽  
Direct Effect ◽  
Adult Population ◽  
Future Research ◽  
Criminal Offending ◽  
Men And Women ◽  
Individual Level ◽  
Criminal Convictions ◽  
Different Types

On an individual level, criminal offending is linked to resource deficiencies. Since evictions tend to affect society’s weakest groups, we would expect evicted individuals to be convicted of crime to a higher degree than others even before eviction. But is there also a direct effect of eviction on criminal convictions? The aim of this study was to isolate the effect of eviction on criminal convictions. Propensity score matching was used and the analyses included all individuals evicted in Sweden from 2009 to 2010 ( n = 5050), and a 10% sample of the adult population ( n = 770,000). After matching based on relevant background factors, the analyses showed a significant increase in criminal convictions from the year of eviction until the end of the period studied, two to three years later. The pattern was similar for men and women. Future research should investigate eviction in relation to different types of crime.

Do Big 4 Auditors Provide Higher Audit Quality after Controlling for the Endogenous Choice of Auditor?

2014 ◽  
Vol 33 (4) ◽  
pp. 197-219 ◽  
Author(s):  
John Daniel Eshleman ◽  
Peng Guo
Keyword(s):  
Propensity Score ◽  
Propensity Score Matching ◽  
Audit Quality ◽  
Data Availability ◽  
Accounting Restatements ◽  
Big 4 ◽  
Audit Firms ◽  
Weak Evidence ◽  
Matching Procedure ◽  
Jel Classifications

SUMMARY: Recent research suggests that Big 4 auditors do not provide higher audit quality than other auditors, after controlling for the endogenous choice of auditor. We re-examine this issue using the incidence of accounting restatements as a measure of audit quality. Using a propensity-score matching procedure similar to that used by recent research to control for clients' endogenous choice of auditor, we find that clients of Big 4 audit firms are less likely to subsequently issue an accounting restatement than are clients of other auditors. In additional tests, we find weak evidence that clients of Big 4 auditors are less likely to issue accounting restatements than are clients of Mid-tier auditors (Grant Thornton and BDO Seidman). Taken together, the evidence suggests that Big 4 auditors do perform higher quality audits. JEL Classifications: M41, M42 Data Availability: All data are publicly available from sources identified in the text.

Audit Quality and Specialist Tenure

2018 ◽  
Vol 94 (3) ◽  
pp. 113-147 ◽  
Author(s):  
Jennifer J. Gaver ◽  
Steven Utke
Keyword(s):  
Propensity Score ◽  
Propensity Score Matching ◽  
Audit Quality ◽  
Discretionary Accruals ◽  
Data Availability ◽  
Client Characteristics ◽  
Industry Specialization ◽  
Auditor Industry Specialization ◽  
Big 4 ◽  
Jel Classifications

ABSTRACT We argue that the association between auditor industry specialization and audit quality depends on how long the auditor has been a specialist. We measure audit quality using absolute discretionary accruals, income-increasing discretionary accruals, and book-tax differences. Our results, based on a sample of Big 4 audit clients from 2003–2015, indicate that auditors who have only recently gained the specialist designation produce a level of audit quality that does not surpass that produced by non-specialist auditors, and is generally lower than the audit quality produced by seasoned specialists. We estimate that the seasoning process takes two to three years. In contrast to prior research that finds no effect of specialization after propensity score matching, we find that seasoned specialists generally produce higher-quality audits than other auditors even after matching. This suggests that the audit quality effect associated with seasoned industry specialist auditors is not due to differences in client characteristics. JEL Classifications: M42. Data Availability: Data used in this study are available from public sources identified in the text.

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