7.      - Admittedly, the author(s

 7.      - Admittedly, the author(s) attempt to account for endogeneity due to omitted variables by using a 2SLS approach and instrument customer stock returns with customer capital structure. While customer capital structure is correlated with customer stock returns, to be a valid instrument, the variable must also be uncorrelated with conditional firm stock returns (the error term in the explanatory regression). In other words, the instrument must satisfy the exclusion restriction. Without doing so, the validity of the instrument is questionable. A large literature suggests that firm-level capital structure is similar within industries. Therefore, the effect of customer capital structure could be correlated with economically similar firms’ capital structure, which might also influence the firms’ stock returns.