Handbook of Empirical Corporate Finance SET

Chapter 2

Self-Selection Models in Corporate Finance*

Li [e-mail]    Sauder School of Business, University of British Columbia, 2053 Main Mall, Vancouver, BC, V6T 1Z2 Canada

Nagpurnanand R. [e-mail]    Robert H. Smith School of Business, University of Maryland, College Park, MD 20742, USA

Abstract

Corporate finance decisions are not made at random, but are usually deliberate decisions by firms or their managers to self-select into their preferred choices. This chapter reviews econometric models of self-selection. The review is organized into two parts. The first part reviews econometric models of self-selection, focusing on the key assumptions of different models and the types of applications they may be best ...