Instrumental Variable Regression Research Articles

Female legislators decrease epidemic deaths

Recent discourse has lauded the efficacy of female leadership in national governments, particularly during the COVID-19 pandemic. This study employs two-way fixed effect (TWFE) and instrumental variable (IV) regression methodologies to reveal a more pronounced association between the proportion of female legislators and reduced epidemic-related mortality, rather than a direct correlation with female executive leadership. Further analysis elucidates that the effectiveness of female legislative representation is amplified through its interaction with the deliberative processes in governance. This suggests that policy diversity and inclusive decision-making mechanisms are instrumental in enhancing epidemic response efficacy.

Expectations of bank automation: the influence of consumer cognitive schema

PurposeThis study aims to investigate the drivers of bank automation system performance expectancy compared to that of bank employees. The purpose is to shed light on the role played by consumers' cognitive schema on automation that is the perfect automation schema (PAS).Design/methodology/approachA survey was administered to about 500 Italian subjects to measure their PAS; financial knowledge, anxiety, and security; and sociodemographic and socioeconomic variables. Ordered probit regressions and an instrumental variable two-stage least squares regression are run.FindingsThe analyses reveal that cognitive schemas play a crucial role in consumer expectations in banking. Individuals with stronger PAS tend to have more positive expectations about bank automation performance compared to employee performance. Financial anxiety and knowledge positively affect bank automation performance expectancy while women, older people, and financially insecure subjects have poor expectations of automated banking systems.Originality/valueThis study extends the understanding of key consumer characteristics that affect bank automation performance expectancy compared to that of bank employees in services delivery in the Italian context. Moreover, it provides useful results for researchers, practitioners, banking institutions, and regulators.

Board gender diversity and accounting conservatism: the role of corporate social responsibility

Purpose This paper aims to provide deeper insights into the relationship between board gender diversity (BGD) and accounting conservatism by exploring the mediating role of corporate social responsibility (CSR) underlying this relationship. Design/methodology/approach The authors sample 10,252 firm-year observations from 932 publicly listed firms in 15 European countries over the 2010–2020 period. The authors conduct several models for panel data, applying mediation mechanisms, the Heckman two-stage model and the generalized method of moments and instrumental variable regressions to test the research hypotheses and account for endogeneity problems as well as unobservable heterogeneity. Findings Based on an integrated theoretical framework that draws insights from agency, resource dependence and stakeholder theories, the authors establish a positive and significant relationship between BGD and accounting conservatism, which is significantly mediated by CSR. The authors provide empirical evidence for the prior inconsistent results on the gender diversity-conservative accounting link and suggest that BGD promotes effective corporate governance and enhances CSR performance, which in turn, leads to higher conservatism in financial reporting. Practical implications The findings have important implications for regulators, policymakers and managers in understanding the drivers to ensure and control the quality of financial reporting. The results alert firms to the need to focus not only on the importance of BGD but also on CSR activities to ensure higher earnings reporting quality. Social implications The results are significant in encouraging a higher presence of women on corporate boards, enhancing CSR performance and drawing social attention to mitigating earnings management practices through higher conservatism in financial reporting. Originality/value This paper recognized a gap in the literature not yet examined and contributed to the body of knowledge through the mediating role of CSR in the relationship between gender diversity and accounting conservatism.

Steering agricultural interventions towards sustained irrigation adoption by farmers: socio-psychological analysis of irrigation practices in Maharashtra, India

The adoption of agricultural technologies like irrigation is influenced by complex contextual and socio-psychological factors. This study used the socio-psychological RANAS framework to examine the factors impacting irrigation adoption in Maharashtra (India). Logistic regression modelling was conducted based on cross-sectional surveys in 2019 and 2022, with interim interventions promoting risk-awareness and irrigation technology training. Effects of the interventions on the psychological variables in 2022 were corrected using instrumental variable regression. While micro-irrigation adoption rose from 36.9% to 62.8%, overall irrigation counterproductively decreased from 81.6% to 70.4%. Results indicated that wealth and risk-aversion remained relevant, while self-perceived ability and attitude towards irrigation became non-significant to irrigation adoption. This study highlights the unintended consequences of interventions and the necessity to also transform attitudes, and promote psychological ownership and trust to sustain irrigation technology adoption behaviour. These results could support stakeholders (policy makers, water authorities, NGOs) in designing and implementing more sustainable interventions.

Steering agricultural interventions towards sustained irrigation adoption by farmers: socio-psychological analysis of irrigation practices in Maharashtra, India

The adoption of agricultural technologies like irrigation is influenced by complex contextual and socio-psychological factors. This study used the socio-psychological RANAS framework to examine the factors impacting irrigation adoption in Maharashtra (India). Logistic regression modelling was conducted based on cross-sectional surveys in 2019 and 2022, with interim interventions promoting risk-awareness and irrigation technology training. Effects of the interventions on the psychological variables in 2022 were corrected using instrumental variable regression. While micro-irrigation adoption rose from 36.9% to 62.8%, overall irrigation counterproductively decreased from 81.6% to 70.4%. Results indicated that wealth and risk-aversion remained relevant, while self-perceived ability and attitude towards irrigation became non-significant to irrigation adoption. This study highlights the unintended consequences of interventions and the necessity to also transform attitudes, and promote psychological ownership and trust to sustain irrigation technology adoption behaviour. These results could support stakeholders (policy makers, water authorities, NGOs) in designing and implementing more sustainable interventions.

The impact of socioeconomic factors on water stress: insights from global analysis

ABSTRACT By utilizing a socioeconomic framework, this paper contributes to the water stress literature. Employing the instrumental variable quantile regression model on 81 countries from 2000 to 2019, our findings reveal financial development can alleviate high levels of water stress. Good governance consistently reduces water stress but human development exacerbates water stress, indicating a conflicting relationship between improving human development and reducing water stress. The moderating effect of good governance reveals that when combined with human development, it can effectively reduce water stress.

IMPACT OF SOCIAL CAPITAL ON PERFORMANCE OF INFORMAL SECTOR FIRMS: EMPIRICAL STUDY USING INDIAN FIRM DATA

Informal sector enterprises are the businesses that do not registered under the government and therefore not entitled for taxations. Social capital refers to the human networks and relationships people often maintain on their development. Three main types of informal businesses considered in this study are manufacturing, reselling and provision of services. They play a significant role in contributing to the global economy especially in developing countries. The study aimed to examine the impact of social capital on informal businesses. The study further explores the mediating effects of Covid pandemic and female ownership on the informal business performance. Secondary data for the study was obtained from World Bank Enterprise Survey website and the dataset was selected in the Indian context as India is one of the leading countries in South Asia where informal businesses have closer proportion of national economy. Dependent variable, informal business performance was measured in terms of profit and total sales, whereas the independent variable, social capital was measured using a self-developed scale by the author. Multiple regression, instrumental variable regression and censored regression (tobit) models have been used in analysis. The STATA version 11.1 is used as the statistical tool. The regression results show a strong positive relationship among the social capital and informal business performance, while the mediating effect of the global pandemic and female ownership on informal business performance were not significant.

Impacts of the energy transition on public health in the context of country risk: From an international perspective

The global climate issue is becoming increasingly serious, and studying the energy transition (ET) has proven to be an effective solution to this problem. The essence of climate mitigation is to address the issue of ensuring the public health (PH) of human beings. Still, the definitions of ET in existing literature are inconsistent, and Many researches overlook the definitions of ET in official documents and discuss the relationship between ET and PH. Therefore, this research utilizes panel data from 107 countries over the period 2000-2020 to construct an energy transition indicator based on the definition from the World Economic Forum (WEF). It also examines the link between ET and PH using a two-way fixed effects regression. In the current turbulent international environment, this paper also investigates this link in the context of composite risk control (CRC), financial risk control (FRC), economic risk control (ERC), and political risk control (PRC). The results show that ET can significantly improve PH, a conclusion that remains significant after being subjected to a range of robustness tests. The study exploring the mechanism impact on the relationship between ET and PH shows that CRC, FRC, ERC, and PRC all strengthen the effect of ET on PH, and the mechanism effect varies considerably between high-income and low- and middle-income countries (LMICs); ET is more significantly affected by the mechanism in LMICs than in high-income countries. Furthermore, this paper illustrates that ET does not differ by gender in improving PH among infants, while there are gender differences in adults by using the instrumental variable regression and GMM regression to mitigate the endogenous and heteroscedasticity issue for heterogeneity test. The study in this paper can not only inspire policy researchers on which aspects to promote ET, but also provide a direction for improving PH.

Related-Party Transactions and CEO Foreign Experience: Evidence from China

Chinese CEOs with foreign experience tend to engage less in related-party transactions (RPTs). This result holds across various analyses, including firm-fixed effects model estimations, matching on firm and CEO characteristics, additional controls, and instrumental variable regressions. The effect of CEO foreign experience is pronounced for non-state-controlled and non–politically connected firms. The effect is weaker for firms with independent boards and foreign shareholders. Moreover, CEOs exposed to more developed institutional environments tend to reduce RPTs more. Collectively, our findings indicate that CEO foreign experience can enhance corporate governance in emerging markets.

Can board of directors’ faultlines improve corporate innovation performance? Evidence from China

Innovation, which is a pivotal force behind the sustained growth of enterprises, has garnered significant attention across various industries. As the epicenter of corporate decision-making, the board of directors plays a pivotal role in allocating resources and overseeing the execution of strategy. Consequently, it inevitably impacts the innovation capabilities of a business. Previous research has focused primarily on single board member characteristics, such as age, gender, tenure, and educational qualifications, overlooking the cumulative influence of multiple attributes. Therefore, this study aims to investigate the impact of faultlines arising from the intersection of these characteristics within a board on innovation performance. Using panel data from China’s A-share listed companies from 2010 to 2021, this research constructs a framework to analyze board faultlines based on gender, age, education, director tenure, independence status, and occupational background. A comprehensive examination reveals a positive association between board faultlines and innovation performance, indicating that diversity within a board can foster enhanced innovative outputs. These findings persist even after rigorous robustness tests, including two-stage instrumental variable regression using lagged innovation performance as well as when substituting explanatory variables and sample intervals. Further analysis reveals that the influence of board faultlines on innovation performance is significant only under certain contextual conditions: when equity concentration is low, industry competition is intense, and risk aversion is greater. This study offers valuable insights for optimizing board membership configurations and thus, ultimately, enhancing the innovation capabilities of enterprises.

Clan culture and corporate cash holdings: Are private companies supported by informal institutions?

In this paper, we empirically examine whether clan culture in China, an extant informal institution established 2000 years ago, affects corporate cash holdings. We use city-level pedigree density as a proxy for clan culture and find that private firms deeply entrenched in clan culture are less likely to hold cash. Our results hold after a series of robustness tests, including instrumental variable regression, alternative measures, and controlling for other influencing factors. Mechanism tests demonstrate that in places with strong clan culture, the cash holdings of private firms are less sensitive to the volatility of operating cash flow, and those non-state-owned enterprises are more likely to obtain alternative financing sources and less likely to carry out high-risk activities. Cross-sectional analyses show that the negative relationship between clan culture and corporate cash holdings is more prominent for firms located in areas with lower marketization or worse economic development. Furthermore, under the shock of the COVID-19 pandemic, firms with strong clan culture enjoy faster growth in trade credit rather than in interest-bearing liabilities. Overall, our findings provide evidence for the existence of sociocultural determinants of corporate cash holding decisions, as they demonstrate that clan culture secures corporate operations and thus reduces the precautionary motives for holding cash.

Can board of directors’ faultlines improve corporate innovation performance? Evidence from China

Innovation, which is a pivotal force behind the sustained growth of enterprises, has garnered significant attention across various industries. As the epicenter of corporate decision-making, the board of directors plays a pivotal role in allocating resources and overseeing the execution of strategy. Consequently, it inevitably impacts the innovation capabilities of a business. Previous research has focused primarily on single board member characteristics, such as age, gender, tenure, and educational qualifications, overlooking the cumulative influence of multiple attributes. Therefore, this study aims to investigate the impact of faultlines arising from the intersection of these characteristics within a board on innovation performance. Using panel data from China’s A-share listed companies from 2010 to 2021, this research constructs a framework to analyze board faultlines based on gender, age, education, director tenure, independence status, and occupational background. A comprehensive examination reveals a positive association between board faultlines and innovation performance, indicating that diversity within a board can foster enhanced innovative outputs. These findings persist even after rigorous robustness tests, including two-stage instrumental variable regression using lagged innovation performance as well as when substituting explanatory variables and sample intervals. Further analysis reveals that the influence of board faultlines on innovation performance is significant only under certain contextual conditions: when equity concentration is low, industry competition is intense, and risk aversion is greater. This study offers valuable insights for optimizing board membership configurations and thus, ultimately, enhancing the innovation capabilities of enterprises.

Increased alcohol intake is associated with radiographic severity of knee and hand osteoarthritis in men

Observational studies have shown controversial associations between alcohol intake and radiographic osteoarthritis (OA). This study investigated whether this association was causal using a Mendelian randomization (MR) study in a population-based cohort in Korean. The study enrolled 2429 subjects (1058 men, 1371 women) from the Dong-gu Study. X-rays of the hand and knee joints were scored using a semi-quantitative grading system to calculate the total score of the hand and knee joints. ALDH2 rs671 genotyping was performed by high-resolution melting analysis. MR instrumental variable analysis and observational multivariable regression analysis were used to estimate the association between genetically predicted alcohol intake and the radiographic severity of OA. Subjects with the G/G genotype had a higher current alcohol intake than those with the G/A and A/A genotypes in both men and women (all P < 0.001). Men with the G/G genotype had higher total knee (P < 0.001) and hand scores (P = 0.042) compared to those with the G/A and A/A genotypes after adjusting for age and body mass index, but not in women. In the observational multivariable regression analysis, each alcohol drink per day in men was associated with increased knee (P = 0.001) and hand joint scores (P = 0.013) after adjustment, but not in women. In our MR analysis, utilizing ALDH2 rs671 genotypes as instrumental variables for alcohol consumption, has shown a significant link between each additional daily alcohol drink and increased radiographic joint severity in men.

Partly linear instrumental variables regressions without smoothing on the instruments

Partly linear instrumental variables regressions without smoothing on the instruments

Hometown religiosity and financial reporting quality: evidence from chairpersons

PurposeThis study aims to investigate whether there is a relationship between the religiosity levels of chairpersons’ hometowns and the financial reporting quality of companies.Design/methodology/approachUsing a unique hand-collected data set obtained from various sources, the authors use ordinary least squares and logistic regressions to test the hypotheses and further implement various methods to address potential issues such as omitted variables, reverse causality and selection bias problems. In addition, the authors control for the religiosity level of chief executive officers’ (CEOs) hometowns. Finally, the authors divide the sample into two subsamples – companies with strong corporate governance and companies with weak corporate governance – to investigate the effect of chairpersons’ hometown religiosity on financial reporting quality under strong or weak corporate governance.FindingsThe findings demonstrate that companies with chairpersons from religious hometowns produce high-quality financial reports. Additional tests, such as the Heckman selection model and instrument variable regression, confirm the robustness of the main results. Controlling for the religiosity level of the CEO’s hometown yields consistent findings with the main results. Finally, additional results indicate that the religiosity levels of chairpersons’ hometowns play a significant role in enhancing financial reporting quality in companies with weak corporate governance.Practical implicationsCompanies should consider appointing board members or chairpersons from more religious hometowns, as the empirical results of this study support the positive effects of chairpersons’ hometown religiosity on financial reporting quality.Originality/valueTo the best of the authors’ knowledge, the current study is among the first to demonstrate the relationship between the religiosity level of the chairpersons’ hometown and the financial reporting quality of companies. The study introduces unique hometown religiosity proxies and controls for various variables related to corporate governance, chairperson attributes, company characteristics, and audit firm characteristics.

The Impact of Political Risks on Financial Markets: Evidence from a Stock Price Crash Perspective

Political risk, one of the most significant uncertainty shocks, affects firms’ future attitudes toward risks and plays a crucial role in their decision making. A stock price crash risk is a classical topic in financial markets; therefore, this paper probes the relationship between firm-level political risk and stock price crash risk based on a sample of Chinese listed firms from 2011 to 2020. This paper collects the MD&amp;A textual material of Chinese listed firms and calculates the firm-level political risk of Chinese listed firms. Our results show that a firm’s stock price crash risk is positively associated with its firm-level political risk exposure. Our findings hold after conducting various robustness tests, including instrument variable regression and altering the measurement of stock price crash risk. Further discussion reveals that political involvement mitigates the positive effect of firm-level political risk on the risk of a stock price jump.

FEMALE IN MANAGER-OWNER TEAMS: DRIVERS OF INNOVATION AND FIRM PERFORMANCE IN MENA MARKETS

This study examines the relationship between women in pivotal organisational roles, innovation, and firm performance in the MENA region. It employs data from the World Bank Enterprise Survey (WBES) across six MENA countries to explore how female leadership, combined with managerial experience (ME), impacts innovation and firm performance. We employ the two-stage least square instrumental variable (2SLS-IV) regression method, which addresses potential biases caused by endogeneity and allows us to discern genuine causal relationships better. Our results indicate a positive influence of female leadership on innovation, although this effect diminishes with more excellent ME. Innovation remains a critical factor for firm performance in the MENA region. This research illuminates the multifaceted role of women in organisational leadership, underscoring their impact on innovation and firm performance, with implications for policymakers and business leaders globally.

#2628 A haemodialysis patient-centred model of care with a multidisciplinary programme: what is its clinical and health efficiency impact?

Abstract Background and Aims Chronic kidney disease (CKD) constitutes a public health concern due to its notable morbidity &amp; mortality and associated costs. The Patient Care Coordination program (PCC) provides comprehensive and personalized care to haemodialysis (HD) patients. This study evaluated the cost-effectiveness of PCC compared to standard of care (SoC). Method The study included patients in 9 HD clinics (5 PCC, 4 SoC) in Catalonia, Spain, in 2020-2021. A comparative effectiveness evaluation was conducted to compare change in Individual Patient Performance Score (IPPS, score 0-100, evaluates parameters such as vascular access, adequacy of HD, anaemia, mineral bone disease, arterial hypertension, nutrition/hydration status) and number of hospitalisations of PCC patients vs SoC during the first year in the program. Instrumental variables (IV) regression analysis was performed to address potential confounding; number of interactions with program specialists was a valid IV to estimate degree of PCC use. An incremental cost-effectiveness analysis (iCEA) through microsimulation was performed using the effectiveness data from the previous step, population data from the renal patient registry of Catalonia, and the cost of hospitalisations obtained from the Public Health System. Results 127 patients in PCC and 363 patients in SoC were included. The degree of PCC use had a positive impact on IPPS variation during the first year of the program (p = 0.012). In the iCEA the PCC program resulted in a mean gain of 3.4 additional IPPS points, a reduction of 0.2 hospitalisations per patient, and reduced mean costs of €1,265 per patient in the first year compared to SoC, resulting to be a dominant alternative (Fig. 1). Conclusion The holistic and interdisciplinary approach to the patient has further highlighted the relevance of programme use and not only belonging to the programme in achieving clinical goals. The PCC program represents thus a dominant alternative, with greater effectiveness and total cost savings that could sum up to €5.5 million per year in the region due to reduced hospitalizations. This approach may be an alternative to address the challenges of CKD and optimise the allocation of healthcare resources.

The Impact of Climate Change Transition Innovations on the Default Risk

In the context of climate change mitigation and adaptation, climate risks stemming from climate transition innovations have garnered significant attention due to concerns about the inadequate climate finance. To shed light on the climate transition risk posed by innovations, this study constructed low-carbon innovation indicators of listed firms in China spanning 2015 to 2021. This study investigated the impact of climate transition innovations on the default risk, considering the mediation effect of investor attention, total factor productivity, and technology spillovers. The findings suggest that low-carbon innovations can mitigate the default risk of listed firms, as evidenced by three low-carbon innovation indicators. Additionally, the research reveals that the climate innovation effect on default risks was moderated when considering climate policy through heterogenous analysis. Furthermore, instrumental variable regressions using the time costs of innovation support the findings. Lastly, default risk was mitigated through lower levels of investor attention, greater total factor productivity, and technology spillovers.

Effect of the contextual (community) level social trust on women’s empowerment: an instrumental variable analysis of 26 nations

The purpose of this paper is to examine the effect of contextual (community) level social trust on women’s empowerment. The specific knowledge gap explored in this study is that the previous studies theorized that community trust has a positive impact on women’s empowerment. Thus, an increase in trust in the community will empower women. However, such an assumption has been never empirically tested and confirmed. Against this backdrop, the present paper develops a theoretical argument on why the increase in community trust should lead to a higher level of women empowerment. Then, a cross-country survey was used as a data source to test the effect of community trust on women’s empowerment. A traditional single-stage OLS and instrumental variable regressions are estimated to test the effect of community trust on women’s empowerment and quantify the magnitude of such impact. The key finding of this paper is that community trust indeed significantly strengthens the empowerment of women by increasing women’s ownership of assets and improving the decision-making authority of women in the family. Importantly, our findings are robust for the separate rural and urban samples, as well as the samples of younger and older women. Equally, our findings are robust for an alternative set of instruments. The main implication of these findings is that policymakers, social administrators, and government authorities who are working on promoting gender equality should give priority to promoting community-based interventions that nurture and maintain women’s trust.