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Economic Significance in Corporate Finance

Author

Listed:
  • Todd Mitton

Abstract

Reporting the economic significance of findings in corporate finance has become increasingly common, but a review of the literature reveals shortcomings in typical reporting practices. Researchers can more effectively communicate the practical importance of findings by using standard measures of economic significance scaled by the standard deviation of the dependent variable, by providing all statistics necessary to calculate economic significance, and by providing benchmarks by which to evaluate the magnitude of economic significance. To support these objectives, I show why measures scaled by the standard deviation are preferable, and I provide benchmarks based on hundreds of established findings from the literature. (JEL C18, C52, G30).

Suggested Citation

  • Todd Mitton, 2024. "Economic Significance in Corporate Finance," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 13(1), pages 38-79.
    • Handle: RePEc:oup:rcorpf:v:13:y:2024:i:1:p:38-79.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfac008
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    Citations

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    Cited by:

    1. Si, Haiping & Li, Chengyu & Miao, Miao & Li, Xueyao & Wang, Chao, 2025. "Every coin has two sides: Does bankruptcy judicial reform promote corporate innovation༟," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1699-1720.
    2. Spokeviciute, Laima & Jahanshahloo, Hossein & Keasey, Kevin & Vallascas, Francesco, 2025. "Three decades of failed bank acquisitions," Journal of Banking & Finance, Elsevier, vol. 170(C).
    3. Shihua Chen & Khalil Jebran & Yingkun Li & Yan Ye, 2026. "Coming Back and Giving Back: Social Class Origins of Entrepreneurs and Corporate Philanthropy in China," Entrepreneurship Theory and Practice, , vol. 50(3), pages 862-888, May.
    4. Li, Wenquan & Neupane, Suman & Tan, Kelvin Jui Keng, 2025. "Environmental externalities of corporate culture: Evidence from firm pollution," The British Accounting Review, Elsevier, vol. 57(5).
    5. Vivien Lefebvre, 2026. "Entrepreneurship at the periphery: financial constraints, firm growth, and the liability of distance in island contexts," Small Business Economics, Springer, vol. 66(3), pages 1395-1418, March.
    6. Barrachina-Fernández, Lucía & Sogorb-Mira, Francisco, 2024. "The influence of peer effects, commodity prices and its hedging on corporate capital structure: Evidence from the oil and gas industry," Energy Economics, Elsevier, vol. 140(C).
    7. Han, Hongwen & Hu, Rui & Tang, Jiali Jenna & Fu, Qing, 2026. "Media coverage and goodwill impairment," Emerging Markets Review, Elsevier, vol. 70(C).
    8. Aktas, Nihat & de Bodt, Eric & Dogan, Can Deniz, 2025. "Do investor reactions to merger announcements shape the writing of SEC filings?," The British Accounting Review, Elsevier, vol. 57(3).
    9. Mehmet Selman Colak & Abdullah Kazdal & Unal Seven & Muhammed Hasan Yilmaz, 2025. "Market Concentration and Firm Markups: Micro Evidence from an Emerging Market with Inflationary Pressures," Working Papers 2501, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    10. Kani, Masayo & Nishimura, Yoichiro, 2025. "Does patent fee reform lower the bar? Evidence from the deferred patent examination system in Japan," Research Policy, Elsevier, vol. 54(4).
    11. Hanwen Chen & Siyi Liu & Di Zhang & Lei Zhang, 2025. "Corporate ESG Washing and ESG Rating Divergence: Evidence From China," Business Strategy and the Environment, Wiley Blackwell, vol. 34(7), pages 8390-8428, November.
    12. Chen, Leqin & Lei, Adrian C.H. & Song, Chen, 2024. "Organization capital and stock price crash risk," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    13. Silvia Bressan, 2025. "Banks’ greenhouse gas emissions and equity value," SN Business & Economics, Springer, vol. 5(11), pages 1-25, November.
    14. J. David Brown & Matthew Denes & Ran Duchin & John Hackney, 2024. "How Big is Small? The Economic Effects of Access to Small Business Subsidies," Working Papers 24-28, Center for Economic Studies, U.S. Census Bureau.
    15. Cheng, Liubing & Chen, Yanyan & Liu, Feng, 2025. "How do dividends signal when they are highly volatile?," Pacific-Basin Finance Journal, Elsevier, vol. 92(C).
    16. Chenguang Fan & Seongho Bae & Yu Liu, 2024. "Fintech and R&D financing: Evidence from China," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 28(3), pages 315-357.
    17. Oesch, David & Walser, Tanja, 2025. "The impact of automation on firms' reporting quality," Journal of Corporate Finance, Elsevier, vol. 92(C).
    18. Herve, Fabrice & Rouine, Ibtissem & Thraya, Mohamed Firas & Zouaoui, Mohamed, 2024. "Investor sentiment and M&A withdrawal: International evidence," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    19. Chen, Yuyang & Gao, Jie, 2025. "Product market effects of expropriation risk: Evidence from a quasi-natural experiment in China," Economic Systems, Elsevier, vol. 49(3).
    20. Liu, Zack & Winegar, Adam, 2025. "Economic magnitudes within reason," Journal of Corporate Finance, Elsevier, vol. 91(C).
    21. Gaia Soana, Maria, 2024. "Does ESG contracting align or compete with stakeholder interests?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 96(C).

    More about this item

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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