Online Appendix of 'An Empirical Assessment of Empirical Corporate Finance' (Coles and Li, JFQA 2022)

We provide in this appendix a relatively parsimonious description of the results for the fields incompletely treated or not addressed in the body of Coles and Li (2022, CL): Observed firm characteristics do best in explaining market leverage, cash holdings, CEO pay level, and accounting performance, and worst in takeover defenses and outcomes, some board characteristics, and firm value (per Tobin’s Q). Observed manager characteristics have relatively high power to explain CEO contract design and low power for firm focus and investment policy. Unobserved manager attributes deliver a high proportion of explained variation in the dependent variable for compensation contract design and aspects of board structure, while unobserved firm attributes provide a high proportion of variation explained for dividend payout, antitakeover defenses, book leverage, and corporate cash holdings. Including manager and firm fixed effects, along with firm and manager observables, delivers the highest adjusted R2 for dividend payout, the propensity to adopt antitakeover defenses, firm risk, and cash holdings. In all 20 areas in corporate finance, including manager and firm fixed effects significantly alters inference on primary explanatory variables