Incorrect Inferences When Using Residuals as Dependent Variables: INCORRECT INFERENCES USING RESIDUALS AS DEPENDENT VARIABLES

By Paul Hribar, Sam Melessa. 2018

319 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7e2560649022a7853b0e453e66fa63c30e217d70

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. C. Mangen
2. Artyom Durnev
3. Tijana Rajkovic
4. Thierry Foucault
5. L. Frésard
6. Rodrigo S. Verdi

In Economics and Econometrics

1. C. Mangen
2. Tijana Rajkovic
3. Artyom Durnev
4. Thierry Foucault
5. L. Frésard

Citations in the corpus

• The spillover effects of MD&A disclosures for real investment: The role of industry competition (2019, methodology): “When the residual from a first-stage regression is used as a dependent variable in a second-stage regression, the estimated second-stage regression coefficients can be biased towards zero or away from zero depending on the correlation between second-stage control variables and first-stage regressors”
• Lead independent directors and investment efficiency (2020, methodology): “One of the possible solutions for the methodology detailed in equations (1) and (2), as explained by Chen et al. (2018), is “to regress the residual from a first-step regression on the combination of all the second-step regressors and all the first-step regressors” (pg. 782).”