I am examining the relation between tax planning and firm value. My data is an unbalanced panel data and I estimated the regression with fixed effects. As I suspect a selection bias, I want to perform a heckman selection model.
However, I am not sure about the control variables and whether to exclude any in the model.
My regression looked like this:
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reghdfe tobin btd TA sales ppe vol nolassets foreigninc std ltd rd, absorb(Year sic) vce(cluster isin Year)
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heckman tobin btd TA sales ppe vol nolassets foreigninc std ltd rd i.Year, select(taxavoid = TA sales vol ppe nolassets foreigninc std ltd rd i.Year) vce(robust)
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Heckman selection model Number of obs = 2,829 (regression model with sample selection) Censored obs = 1,435 Uncensored obs = 1,394 Wald chi2(19) = 237.86 Log pseudolikelihood = -4144.806 Prob > chi2 = 0.0000 ------------------------------------------------------------------------------ | Robust | Coef. Std. Err. z P>|z| [95% Conf. Interval] -------------+---------------------------------------------------------------- tobin | w_btd | 6.904373 1.240759 5.56 0.000 4.472531 9.336215 w_TA | -4.898546 .6854721 -7.15 0.000 -6.242046 -3.555045 sales | -.0730264 .0401021 -1.82 0.069 -.1516251 .0055723 ppe2 | -1.255607 .1520859 -8.26 0.000 -1.55369 -.9575241 vol | .0260516 .0290061 0.90 0.369 -.0307993 .0829026 nolassets | 121.1902 113.3512 1.07 0.285 -100.974 343.3544 foreigninc | .014931 .0835962 0.18 0.858 -.1489145 .1787765 std | .3343805 .8761062 0.38 0.703 -1.382756 2.051517 ltd | .4227263 .1981058 2.13 0.033 .0344461 .8110065 changerd | 23.37676 4.954492 4.72 0.000 13.66613 33.08739 | | _cons | 1.31306 .1498813 8.76 0.000 1.019298 1.606822 -------------+---------------------------------------------------------------- taxavoid | w_TA | .6723251 .3413934 1.97 0.049 .0032062 1.341444 sales | -.2075946 .0338522 -6.13 0.000 -.2739438 -.1412455 vol | .0559122 .0211032 2.65 0.008 .0145507 .0972737 ppe2 | .5709638 .1226611 4.65 0.000 .3305524 .8113752 nolassets | 419.0152 123.7301 3.39 0.001 176.5086 661.5217 foreigninc | .1127357 .0660463 1.71 0.088 -.0167126 .242184 std | 1.129645 .5186263 2.18 0.029 .1131565 2.146134 ltd | .1060875 .0973646 1.09 0.276 -.0847435 .2969186 changerd | -.0004607 1.700443 -0.00 1.000 -3.333269 3.332347 | | _cons | .0981113 .0917423 1.07 0.285 -.0817003 .2779229 -------------+---------------------------------------------------------------- /athrho | -.009978 .0570314 -0.17 0.861 -.1217576 .1018015 /lnsigma | .2156416 .0404441 5.33 0.000 .1363726 .2949106 -------------+---------------------------------------------------------------- rho | -.0099777 .0570258 -.1211595 .1014513 sigma | 1.240658 .0501773 1.146109 1.343006 lambda | -.0123789 .0707588 -.1510635 .1263057 ------------------------------------------------------------------------------ Wald test of indep. eqns. (rho = 0): chi2(1) = 0.03 Prob > chi2 = 0.8611
I also tried using the code xtheckmanfe but it does keep calculating and calculating and does not deliver any results.
1.) My question is now, is the code for the model conducted right?
2.) My fixed effects model before also showed a positive relation between tax avoidance (btd) and firm value (Tobin). Am I interpreting the Heckman model right that the coefficient of 6.9 also shows a positive relation or do I have to interpret it in another way?
3.) Is it possible that I do not have a selection problem because I cannot reject the H0 of the pictured Wald test?
I am using Stata 14.
Thank you in advance!
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