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  • Propensity Score Matching (PSM) to match firms based on age, size and industry

    Dear community,

    I have a data set of firms that went public via a SPAC merger (SPAC=1). Now I want to match each firm with SPAC=1 with one similar firm that went public via an IPO (SPAC=0), based on firm size (ln of book value of assets), age (years), and industry (2-digit sic).
    I understand that one way to do so is setting up a propensity score matching. However, I struggle to set up the matching in STATA. I found a similar question here, but unfortunately, it does not help me in finding a solution.

    Please find below a few lines of my sample for reference.
    Any help is highly appreciated!

    Best,
    Tim
    ID SPAC SIZE AGE INDUSTRY
    1 1 2,04 1 28
    2 1 7,91 2 73
    3 1 8,76 3 14
    4 1 13,03 3 87
    5 1 13,83 5 73
    6 1 15,67 6 13
    7 1 16,42 5 59
    8 1 18,21 3 78
    9 1 19,24 8 73
    10 1 1,56 3 99
    11 0 3,47 5 28
    12 0 4,49 2 36
    13 0 6,01 7 28
    14 0 9,12 4 73
    15 0 10,69 10 28
    16 0 13,08 6 17
    17 0 16,93 15 28
    18 0 18,37 8 28
    19 0 19,88 13 73
    20 0 22,02 10 73







  • #2
    Tim, you may use -kmatch- (from SSC) to approximately match on size and age, and to exactly match on industry.

    Code:
    kmatch ps SPAC size age, nn(1) ematch(industry)

    Comment


    • #3
      Thanks for the posts. Very helpful. I have a follow-up question: how do you do t test for the variables for matching, i.e., size and age, to see if they are statistically significant or not after kmatch?

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