Economic Significance in Corporate Finance

Abstract Reporting the economic significance of findings in corporate finance has become increasingly common, but a review of the literature reveals shortcomings in typical reporting practices. Researchers can more effectively communicate the practical importance of findings by using standard measur...

Full description

Saved in:
Bibliographic Details
Published in:The Review of Corporate Finance Studies 2024-02, Vol.13 (1), p.38-79
Main Author: Mitton, Todd
Format: Article
Language:English
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Abstract Reporting the economic significance of findings in corporate finance has become increasingly common, but a review of the literature reveals shortcomings in typical reporting practices. Researchers can more effectively communicate the practical importance of findings by using standard measures of economic significance scaled by the standard deviation of the dependent variable, by providing all statistics necessary to calculate economic significance, and by providing benchmarks by which to evaluate the magnitude of economic significance. To support these objectives, I show why measures scaled by the standard deviation are preferable, and I provide benchmarks based on hundreds of established findings from the literature. (JEL C18, C52, G30).
ISSN:2046-9128
2046-9136
DOI:10.1093/rcfs/cfac008