Is Post-Matching DiD an Appropriate Method in Empirical Studies? The Research Design Matters

14 Pages Posted: 18 Jun 2020 Last revised: 24 Jun 2020

See all articles by Chung‐Hua Shen

Chung‐Hua Shen

Nanjing Audit University - School of Finance

Hsing-Hua Hsu

Nanjing Audit University - School of Finance

Date Written: May 25, 2020

Abstract

This study clarifies the model that should be applied when investigating the impact of an event on outcome variable for a perfectly-matched sample. Empirically, DiD regression is a widely used approach in analyzing exogenous shocks with imperfectly matched or unmatched sample. Results from the coefficient and graphic analyses show that only dummies that indicate the post-treatment effect shall be considered if exact matching in individual characteristics is conducted beforehand. The results can provide clear guidance for social science studies such as finance and economics.

Keywords: Matching Method, Difference-in-Difference (DiD), Endogeneity, Parallel Trend Assumption

JEL Classification: C81, C50, G15, G30

Suggested Citation

Shen, Chung‐Hua and Hsu, Hsing-Hua, Is Post-Matching DiD an Appropriate Method in Empirical Studies? The Research Design Matters (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3609744 or http://dx.doi.org/10.2139/ssrn.3609744

Chung‐Hua Shen

Nanjing Audit University - School of Finance ( email )

86 Yushan West Rd. Pukou District
Nanjing City, Jiang Su Province 211815
China

Hsing-Hua Hsu (Contact Author)

Nanjing Audit University - School of Finance ( email )

86 Yushan West Rd. Pukou District
Nanjing City, Jiang Su Province 211815
China

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