Endogeneity in accounting and finance research

natural experiments as a state-of-the-art solution

Jennifer Gippel, Tom Smith, Yushu Zhu

Research output: Contribution to journalArticle

50 Citations (Scopus)


This paper provides a discussion of endogeneity as it relates to finance and accounting research. We discuss the textbook solutions: two-stage least squares, instrumental variables, differenced generalized method of moments (GMM) and system GMM and provide a unifying framework showing how they are related. We consider the limitations of these techniques and then detail a state-of-the-art solution, utilizing a natural experiment as a way of mitigating endogeneity and building stronger theory.
Original languageEnglish
Pages (from-to)143-168
Number of pages26
Issue number2
Publication statusPublished - Jun 2015
Externally publishedYes


  • Corporate governance
  • Endogeneity
  • Natural or quasi experiment

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