Self-Selection Bias and the Economic Consequences of Accounting Regulation: An Application of Two-Stage Switching Regression to SFAS No. 2.

Key Points

• The study aims to analyze self-selection bias in evaluating the economic effects of accounting regulation, focusing on SFAS No. 2.
• Applied a two-stage switching regression model
• Examined the case of SFAS No. 2
• Identified sources of self-selection bias
• Demonstrated significant economic consequences of accounting regulation
• Uncovered effects of selection bias on regulatory analysis
• Highlighted the need for improved methods in regulatory evaluations