Sustainable Causal Interpretation with Board Characteristics: Caveat Emptor
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Statistics Discipline, University of Minnesota at Morris, Morris, MN 56267, USA
2
Department of Finance, Ziegler College of Business, Bloomsburg University, Bloomsburg, PA 17815, USA
3
School of Business Administration, Ulsan National Institute of Science and Technology (UNIST), Ulsan 44919, Korea
*
Author to whom correspondence should be addressed.
Sustainability 2020, 12(8), 3429; https://doi.org/10.3390/su12083429
Received: 31 March 2020 / Revised: 15 April 2020 / Accepted: 20 April 2020 / Published: 22 April 2020
(This article belongs to the Section Economic and Business Aspects of Sustainability)
The study of a causal interpretation of board and firm characteristics, that is, a hidden dependence relationship on the causal inference among board and firm characteristics, is an important but unaddressed issue in the corporate governance literature. Using diverse advanced statistical methods and focusing on Tobin’s Q, we find that (i) not all board variables previously found to be significant are “robust” to latent variable data analysis, and (ii) those variables that are consistently significant differ markedly in latent structural equation analysis. Our analyses provide researchers interested in board issues with an important caveat: Focusing on the dependence structure of available board variables affected by latent factors may introduce a new horizon in corporate finance.
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Keywords:
causal inference; board structure; corporate governance; Gaussian copula marginal regression; functional principal component analysis; structural equation modeling; directed acyclic graph; latent variable analysis
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MDPI and ACS Style
Kim, J.-M.; Jun, C.; Han, H.H. Sustainable Causal Interpretation with Board Characteristics: Caveat Emptor. Sustainability 2020, 12, 3429. https://doi.org/10.3390/su12083429
AMA Style
Kim J-M, Jun C, Han HH. Sustainable Causal Interpretation with Board Characteristics: Caveat Emptor. Sustainability. 2020; 12(8):3429. https://doi.org/10.3390/su12083429
Chicago/Turabian StyleKim, Jong-Min, Chulhee Jun, and Hope H. Han 2020. "Sustainable Causal Interpretation with Board Characteristics: Caveat Emptor" Sustainability 12, no. 8: 3429. https://doi.org/10.3390/su12083429
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