Abstract:
Empirical accounting research frequently makes use of data sets with a time-series
and a cross-sectional dimension – a panel of data. The literature review indicates that
South African researchers infrequently allow for heterogeneity between firms when
using panel data and the empirical example shows that regression results that allow
for firm heterogeneity are materially different from regression results that assume
homogeneity among firms. The econometric analysis of panel data has advanced
significantly in recent years and accounting researchers should benefit from those
improvements.
