Dear all,

In my study, I am looking at the change in institutional holdings at a certain point (Restatement quarter) in time.
I am using a regression where the firm is used as its own control instead of a cross-sectional design or a matched sample. See screenshot, and variable B3 in particular.

The study that I follow states this has several advantages. To be honest, I do not really get this. The two advantages are:
1) using the firm as its own control and measuring the changes in institutional holdings relative to the restatement date allows us to hold constant other firm characteristics that are more likely to vary significantly in a cross-sectional research design than over the 9-quarter event period that we examine.
2) the use of this within-subjects research design provides a more powerful test because the cross-sectional differences between firms are not included in the error variance. This is particularly important when observations are limited as is the case with the restatement database.

Maybe it's a long shot, but I really hope someone can explain (a part) to me.
I would be really thankful!

Kind regards,
Imke


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