3.7 Propensity Score Matching
In addition to the study to investigate the influence of HA on disclosure and information asymmetry, through regressions, as highlighted in sections 3.4 and 3.5, this research will also resort to the propensity score matching technique, known as PSM, in order to investigate the causal effect of HA on disclosure and information asymmetry.
Propensity score is the conditional probability of exposure to some treatment, given a vector of observed covariables (Rosenbaum & Rubin, 1983). To identify the causal effect, however, a problem may be caused. The outcome variable to analyze the causal effect – for this research we have DDI and DAFA – it is observed, in a year i, by one or another case where the company has or does not have HA, but it is never seen in both cases for the same company in a given year i. It is understood that, according to the counterfactual theory of causation, the ideal might be to analyze the same company in similar contexts, but differing only in the treatment circumstance, in this case having HA or not.