Dear CEM List members,
My research question examines whether firms adopting fair value accounting
for their
pensions change their pension plan assets. I was wondering if you could
help me with the following
quick questions about Coarsened Exact Matching.
1. What is the best practice for selecting the cut points? (I have read
that Scott and Freedman-Diaconnis are the preferred methods.)
2. My treatment sample is very small and using Scott or Freedman-Diaconnis
leads me to lose many treated firms. So I use deciles for certain matching
variables instead of the Scott or FD. Would this still be a concern if the
imbalance is low?
3. Is there a reasonable value for L1? I know that the lower value means
less imbalance but is there a rule of thumb?
4. After creating a matched sample, are there any practical guides on how
to run the regression? Some treated firms are matched with multiple control
firms, and I believe that it is not a problem to run the regression even if
some firms are matched with more control firms. Is there an issue if we
don't have exact number of paired treated and controlled firms?
Thank you so much for your time and consideration.
Kind Regards,
Pureum Kim