Meta-Analysis in Financial Economics: Opportunities, Challenges, and Contemporary Applications

Abstract

The volume of empirical research output in finance exhibits a strong upward trajectory, often producing widely varying and ambiguous results. At the same time, we observe a credibility crisis challenging the reliability and transparency of academic research. This creates demand for methods that objectively evaluate and consolidate previous empirical evidence. Meta-analysis is a statistical method to aggregate a set of prior studies, to discover and explain consistencies as well as inconsistencies within the reported results, and to detect and filter out common distorting effects due to publication bias or model misspecification. However, while meta-analysis is a standard tool for research synthesis and evidence-based decisions in many related research disciplines, like management, marketing, or economics, it has been rarely applied in finance. The goal of this paper is to provide a comprehensive overview and discussion of the opportunities of meta-analytical research in financial economics, its recent applications, as well as related challenges and limitations. Thereby, we aim at increasing the awareness and acceptance of meta-analysis in finance and stimulating its future application in the field.

Keywords: meta-analysis, meta-regression, synthesis, publication bias, financial economics

JEL Classification: G00, C83