Omitted Variables Bias

Endogeneity in Empirical CorporateFinance ArXiv ID: ssrn-1748604 “View on arXiv” Authors: Unknown Abstract This chapter discusses how applied researchers in corporate finance can address endogeneity concerns. We begin by reviewing the sources of endogeneity - omitted Keywords: Endogeneity, Corporate Finance, Instrumental Variables, Quasi-Natural Experiments, Omitted Variables Bias, Equity Complexity vs Empirical Score Math Complexity: 7.0/10 Empirical Rigor: 4.0/10 Quadrant: Lab Rats Why: The paper is highly technical, covering advanced econometric techniques like instrumental variables, panel data methods, and regression discontinuity designs, which places it firmly in high math complexity. However, it is a theoretical survey/review focused on methodology rather than presenting backtest-ready data or specific implementations, leading to low empirical rigor. flowchart TD A["Research Goal Address Endogeneity in Corporate Finance"] --> B["Identify Endogeneity Source e.g., Omitted Variables"] B --> C{"Choose Methodology"} C --> D["Instrumental Variables IV Approach"] C --> E["Quasi-Natural Experiments DID / RD Designs"] D --> F["Data & Inputs Equity Data, Instrument Validity"] E --> F F --> G["Computational Process 2SLS / Regression Analysis"] G --> H["Key Findings Validated Causal Inferences Reduced Bias in Equity Studies"]