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Multiple Mediators and Moderators in SEM

Chapter 16 focuses on advanced modeling techniques for dissertations, specifically addressing multiple mediators and moderators in accounting/business contexts. It introduces practical models for parallel and serial mediation, as well as handling two moderators, and provides guidance on using Stata for structural equation modeling (SEM). The chapter concludes with reporting requirements for multiple indirect effects to ensure clarity and accuracy in dissertation results.

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0% found this document useful (0 votes)
29 views8 pages

Multiple Mediators and Moderators in SEM

Chapter 16 focuses on advanced modeling techniques for dissertations, specifically addressing multiple mediators and moderators in accounting/business contexts. It introduces practical models for parallel and serial mediation, as well as handling two moderators, and provides guidance on using Stata for structural equation modeling (SEM). The chapter concludes with reporting requirements for multiple indirect effects to ensure clarity and accuracy in dissertation results.

Uploaded by

yvesfondze
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Chapter 16: Multiple mediators and multiple

moderators (5–7 pages)


(This chapter extends Chapters 13–15. You learn how to (i) handle more than one mediator, (ii) handle more
than one moderator, and (iii) report multiple indirect effects clearly in dissertations.)

16.0 Chapter aim


Many dissertation topics are not “one mechanism only.” In accounting/business settings, AIS quality can
improve profitability through multiple channels at the same time (controls, reporting quality, budgeting
discipline, compliance culture, etc.). Likewise, the strength of these relationships may differ by more
than one condition (e.g., firm size and governance).

This chapter teaches three practical models:

1) Parallel mediators (M1 and M2 operate side-by-side) 2) Serial mediators (intro level) (M1 affects M2,
then Y) 3) Two moderators (basic) (two moderators of the same X→Y relationship)

It also teaches the Stata SEM specification strategy and how to report multiple indirect effects
without confusion.

Learning outcomes

By the end of this chapter you will be able to:

1) Draw correct path diagrams for parallel and serial mediation. 2) Write the correct equations and
name the specific indirect effects. 3) Estimate models in Stata using SEM (observed variables). 4)
Compute and report: - specific indirect effects (e.g., X→M1→Y, X→M2→Y, X→M1→M2→Y) - total
indirect effect (sum of specific indirect effects) - direct effect and total effect 5) Fit and interpret a
two-moderator interaction model with margins.

16.1 The running accounting story (consistent with Chapters 13–


15)
We keep the same business mechanism style (edit variable names to your dissertation):

• X (Predictor): AIS quality ( ais_q )


• Y (Outcome): profitability ( roa )
• M1 (Mediator 1): internal control effectiveness ( ic_eff )
• M2 (Mediator 2): financial reporting quality ( frq )
• Z1 (Moderator 1): firm size ( ln_assets )
• Z2 (Moderator 2): governance strength ( gov_strength ) or audited status ( audited )
• C (Controls): leverage, liquidity, growth, audit fees, board size, sector, region, firm age,
employees

1
Interpretation idea: - AIS may strengthen internal controls (M1). - AIS may also improve reporting
quality (M2). - Both can improve ROA.

16.2 Model A — Parallel mediators

16.2.1 When you use parallel mediation

Use parallel mediators when: - M1 and M2 are both mechanisms from X to Y, - you do not claim that M1
causes M2 (or M2 causes M1).

Example dissertation sentence:

“AIS quality improves profitability through stronger internal controls and improved
reporting quality.”

Figure 16.1 — Parallel mediators

Name for verification: “Parallel mediation: X→M1→Y and X→M2→Y simultaneously.”

flowchart LR
X[X: AIS quality] -->|a1| M1[M1: Internal controls]
X -->|a2| M2[M2: Reporting quality]
M1 -->|b1| Y[Y: ROA]
M2 -->|b2| Y
X -->|c'| Y

16.2.2 Equations (linear case)

Mediator equations:

M1 = α10 + a1 X + γ1′ C + ε1

M2 = α20 + a2 X + γ2′ C + ε2

Outcome equation:

Y = β0 + c′ X + b1 M1 + b2 M2 + δ ′ C + εY

16.2.3 Specific and total indirect effects

• Specific indirect via M1:

IEM 1 = a1 b1

• Specific indirect via M2:

IEM 2 = a2 b2

2
• Total indirect effect:

IET otal = IEM 1 + IEM 2

• Total effect (linear decomposition):

TE = c′ + IET otal

Reporting rule: in parallel mediation you must report both specific indirect effects, not only the total.

16.3 Model B — Serial mediators (intro)

16.3.1 When you use serial mediation

Use serial mediation when your theory says: - X affects M1, - M1 affects M2, - and M2 affects Y.

Example dissertation sentence:

“AIS quality strengthens internal controls, which improves reporting quality, which then
improves profitability.”

Figure 16.2 — Serial mediation (M1→M2)

Name for verification: “Serial mediation: X→M1→M2→Y.”

flowchart LR
X[X: AIS quality] -->|a1| M1[M1: Internal controls]
M1 -->|d| M2[M2: Reporting quality]
M2 -->|b2| Y[Y: ROA]
M1 -->|b1| Y
X -->|a2| M2
X -->|c'| Y

Notes: - The diagram shows an intro but realistic serial system where: - X can also affect M2 directly (a2),
- M1 can also affect Y directly (b1).

16.3.2 Equations (linear case)

M1 = α10 + a1 X + γ1′ C + ε1

M2 = α20 + a2 X + dM1 + γ2′ C + ε2

Y = β0 + c′ X + b1 M1 + b2 M2 + δ ′ C + εY

16.3.3 Specific indirect effects you must report

In this system, three indirect paths are common:

3
1) X→M1→Y

IEX→M 1→Y = a1 b1

2) X→M2→Y

IEX→M 2→Y = a2 b2

3) Serial path X→M1→M2→Y

IESerial = a1 db2

Total indirect effect:

IET otal = a1 b1 + a2 b2 + a1 db2

Common examiner question: “Which pathway is the strongest mechanism?” - Answer using the specific
indirect effects and their CIs.

16.4 Model C — Two moderators (basic)

16.4.1 What “two moderators” means here

In Chapters 9–12 you learned a single moderator Z. Here, you allow the X→Y association to depend on
two conditions.

Example dissertation sentence:

“AIS quality improves profitability more strongly in larger firms and under stronger
governance.”

16.4.2 The three-way interaction model (OLS form)

A clean specification is:

Y = β0 + β1 X + β2 Z1 + β3 Z2 + β4 (XZ1 ) + β5 (XZ2 ) + β6 (Z1 Z2 ) + β7 (XZ1 Z2 ) + θ′ C + ε

Interpretation: -
β4 : how size changes the X→Y effect (holding governance fixed) - β5 : how governance
changes the X→Y effect (holding size fixed) - β7 : whether the moderation by one moderator depends on
the level of the other (the “moderation of moderation”).

16.4.3 Why we treat this as a margins problem

With two moderators, interpretation by coefficients alone becomes messy.

Correct solution: probe the interaction using margins: - simple slopes of X at combinations of (Z1, Z2) -
predicted values across X at combinations of (Z1, Z2)

4
16.5 Stata: SEM specification strategy (how to build correctly)

16.5.1 Strategy rule 1 — Start with the diagram, then write equations

For SEM, you are literally typing the diagram into Stata.

• Every arrow in the diagram becomes part of an equation.


• Every mediator gets its own equation.

16.5.2 Strategy rule 2 — Keep one consistent covariate block

Define controls once, reuse them in all equations unless theory forces otherwise.

Example:

global C "c.firm_age [Link] c.ln_assets [Link] [Link]


c.sales_growth c.audit_fee_k c.board_size [Link] [Link] [Link]"

16.5.3 Strategy rule 3 — Center before creating product terms

• Center continuous X and moderators.


• Then generate product terms manually for SEM (this is safer than relying on factor notation
inside SEM).

16.5.4 Strategy rule 4 — Name your coefficients in your notes

Before you run nlcom , write down: - which equation contains a1, a2, d, b1, b2, c′

This prevents the common error of multiplying the wrong coefficients.

16.6 Stata workflows

16.6.1 Parallel mediators in SEM (observed variables)

* Parallel mediation
sem (ic_eff <- ais_c $C) ///
(frq <- ais_c $C) ///
(roa <- ic_eff frq ais_c $C)

* Specific indirect effects


nlcom ///
(ie_ic: _b[ic_eff:ais_c] * _b[roa:ic_eff]) ///
(ie_frq: _b[frq:ais_c] * _b[roa:frq]) ///
(ie_total: (_b[ic_eff:ais_c] * _b[roa:ic_eff]) + (_b[frq:ais_c] *
_b[roa:frq]))

5
Bootstrap CIs (recommended): write a small program that returns the indirect effects, then bootstrap
them.

16.6.2 Serial mediation in SEM (intro)

* Serial mediation
sem (ic_eff <- ais_c $C) ///
(frq <- ic_eff ais_c $C) ///
(roa <- ic_eff frq ais_c $C)

nlcom ///
(ie_x_m1_y: _b[ic_eff:ais_c] * _b[roa:ic_eff]) ///
(ie_x_m2_y: _b[frq:ais_c] * _b[roa:frq]) ///
(ie_serial: _b[ic_eff:ais_c] * _b[frq:ic_eff] * _b[roa:frq])

16.6.3 Two moderators (basic) using regression + margins

(This is usually easier than forcing three-way interactions into SEM for beginners.)

regress roa c.ais_c##c.size_c##c.gov_c $C, vce(robust)

* Simple slopes of AIS at combinations of size and governance


summ size_c, meanonly
local ssd = r(sd)

summ gov_c, meanonly


local gsd = r(sd)

margins, dydx(ais_c) at(size_c=(-`ssd' 0 `ssd') gov_c=(-`gsd' 0 `gsd'))

* Plot predicted ROA across AIS at selected combinations


margins, at(ais_c=(-2(1)2) size_c=(-`ssd' 0 `ssd') gov_c=(-`gsd' 0 `gsd'))
marginsplot

16.7 Reporting multiple indirect effects (examiner-proof)

16.7.1 What you must report (minimum)

For multiple mediators, your dissertation results must include:

1) Equation results (SEM system): - mediator equations (a-paths) - outcome equation (b-paths and c′) 2)
Specific indirect effects (each pathway) with confidence intervals 3) Total indirect effect (sum) 4)
Direct effect (c′) 5) Total effect (TE)

6
16.7.2 Table templates

Table 16.1 — SEM equations (parallel or serial) - Panel A: M1 equation - Panel B: M2 equation (if
applicable) - Panel C: Y equation

Table 16.2 — Specific indirect effects (parallel mediation) | Path | Indirect effect | 95% CI | Decision
| |---|---:|---|---| | X→M1→Y | | | | | X→M2→Y | | | | | Total indirect | | | |

Table 16.3 — Specific indirect effects (serial mediation) | Path | Indirect effect | 95% CI | Meaning |
|---|---:|---|---| | X→M1→Y | | | direct M1 channel | | X→M2→Y | | | direct M2 channel | |
X→M1→M2→Y | | | serial channel | | Total indirect | | | overall mechanism |

16.7.3 Writing template (parallel mediators)

Use this structure:

“We estimated a parallel multiple-mediator SEM in which AIS quality affects profitability
through internal controls and reporting quality. AIS quality positively predicted internal
controls (a1) and reporting quality (a2). Both internal controls and reporting quality
positively predicted ROA controlling AIS quality and covariates (b1, b2). Specific indirect
effects show that AIS influences ROA through internal controls (a1b1 = …) and through
reporting quality (a2b2 = …), with bootstrap confidence intervals excluding/including zero.
The total indirect effect was …, while the direct effect of AIS on ROA remained …,
indicating partial/complete mediation.”

16.7.4 Writing template (serial mediators)

“We estimated a serial mediation SEM where AIS quality affects internal controls, which
improves reporting quality, which then improves profitability. AIS positively predicted
internal controls (a1), internal controls predicted reporting quality (d), and reporting
quality predicted ROA (b2). The serial indirect effect (a1·d·b2) was … with a bootstrap CI …,
suggesting that AIS affects profitability partly through a sequential mechanism from
controls to reporting quality.”

16.8 Hands-on lab tasks (what students submit)

Task A — Parallel mediators

1) Fit the parallel SEM. 2) Compute IE via M1 and IE via M2, plus total indirect. 3) Bootstrap the specific
indirect effects. 4) Fill Table 16.2 and write a ½-page interpretation.

Task B — Serial mediators (intro)

1) Fit the serial SEM. 2) Compute the serial indirect effect and other specific indirects. 3) Bootstrap them.
4) Fill Table 16.3 and write a ½-page interpretation.

7
Task C — Two moderators

1) Fit the three-way interaction regression. 2) Use margins to compute simple slopes of AIS. 3) Provide
one marginsplot and one paragraph interpretation.

16.9 Common mistakes (and quick fixes)


1) Reporting only one indirect effect in a multiple-mediator model - Fix: report each specific indirect +
total indirect.

2) Claiming serial mediation without modeling M1→M2 - Fix: if you claim a chain, include the chain
arrow.

3) Using significance of single coefficients as proof of indirect effects - Fix: indirect effects are
products; compute them and report CIs.

4) Interpreting two-moderator models without margins - Fix: always probe with margins and
show at least one plot.

16.10 References for verification (core)


• Baron, R. M., & Kenny, D. A. (1986). Moderator–mediator distinction.
• Hayes, A. F. (2018). Conditional process analysis (multiple mediators and moderators).
• Preacher, K. J., Rucker, D. D., & Hayes, A. F. (2007). Conditional indirect effects logic.
• MacKinnon, D. P. (2008). Mediation analysis foundations.
• StataCorp. SEM documentation ( sem , nlcom , bootstrap), and margins / marginsplot for
probing interactions.

Common questions

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A three-way interaction model can be simplified for beginners by using margins in regression analysis rather than integrating all interactions into SEM initially. This simplification allows for clearer interpretation, as margins can help explore simple slopes at various combinations of moderator levels, making the interaction effects more comprehensible. This approach mitigates the complexity typically associated with high-order interactions and ensures that beginners can construct, analyze, and interpret the effects accurately without getting overwhelmed by the mathematical intricacies of direct SEM modeling . Simplification is critical as it lays the foundation for understanding fundamental relationships without the added confusion of complex modeling techniques, thus facilitating learning and accurate application .

Parallel mediation models should be used when multiple mediators operate independently from the predictor (X) to the outcome (Y). Specifically, they do not affect each other, meaning that neither mediator causes the other, and both evaluate separate indirect pathways from X to Y. For example, Account Information Systems (AIS) can simultaneously improve profitability through independent paths like strengthening internal controls and improving financial reporting quality . On the other hand, serial mediation involves mediators that form a causal chain. In this model, the predictor affects a mediator, which in turn affects another mediator, which finally affects the outcome. This model is used when theory suggests a sequential process, such as AIS quality affecting internal controls, which then improves reporting quality and ultimately profitability .

The Stata SEM specification strategy significantly optimizes mediation/moderation analysis by aligning the model-building process with the theoretical path diagram. This approach involves translating each arrow from the path diagram into SEM syntax, ensuring that each mediator gets its unique equation. The strategy enhances efficiency and minimizes errors by maintaining consistent covariate blocks across equations, centering variables before creating interaction terms, and systematically naming coefficients to avoid misinterpretation. These steps ensure comprehensive modeling and facilitate the clear reporting of indirect effects and interaction terms, reflecting their theoretical underpinnings accurately . Moreover, using this systematic approach helps to avoid common mistakes, such as incorrect coefficient multiplication or omitted path inclusion, thus leading to more reliable and interpretable results .

Centering continuous variables before creating product terms in mediation or moderation analysis is important to reduce multicollinearity among predictors, which can adversely affect the interpretation of the model parameters. Centering involves subtracting the mean from each observation, which recodes the variable but retains its variance structure. Procedurally, researchers should first compute the mean of the continuous variable, subtract it from each data point to create a centered variable, and then use this centered variable to compute interaction or product terms . This step is critical in moderation analysis where product terms are used to capture interaction effects, ensuring that the estimates of main and interaction effects are unbiased and interpretable .

When two moderators are present, the interpretation of the X→Y relationship becomes more complex, as the effect of X on Y may vary under different conditions specified by the moderators. These patterns of interactions necessitate examining not just the main effects but also the interaction effects among predictors and moderators. To manage this complexity, the recommended statistical technique involves probing the interaction using margins to understand simple slopes of X across combinations of moderators' levels, and visualizing these interactions through plots . This approach enables a clear examination of how the moderation by one variable may depend on the level of another, providing a nuanced understanding of conditional effects .

It's crucial to report specific indirect effects separately when dealing with multiple mediators to distinguish the individual contribution of each mediator to the overall effect from the predictor to the outcome. This helps in understanding the distinct mechanisms through which the predictor influences the outcome. For example, in a parallel mediation setup, reporting involves calculating and representing paths such as X→M1→Y and X→M2→Y independently along with their confidence intervals. Neglecting to separate these effects can masked the unique impact of each mediator, potentially misleading conclusions about the studied mechanisms . Reporting formats include tables that show each specific indirect effect alongside total indirect and direct effects for clarity and can include interpretations based on statistical significance and confidence interval values .

To avoid common errors in modeling indirect effects and multiple moderators, researchers should adhere to several procedural strategies: first, report each specific indirect effect alongside the total indirect effect to capture the full scope of mediated relationships. Second, when claiming serial mediation, include all necessary paths in the model (e.g., if M1 affects M2, ensure this chain is modeled). Third, avoid using the significance of single coefficients as proof of indirect effects; instead, compute and report the products of paths with confidence intervals to substantiate mediation claims. Lastly, when interpreting models with two moderators, always use margins to probe interaction effects accurately and provide a plot for visual representation . By following these strategies, researchers can achieve more accurate modeling and interpretation of complex moderated mediation analyses .

Determining the strongest mediation pathway in a model with multiple mediators requires analyzing the specific indirect effects and their confidence intervals (CIs). The specific indirect effects quantify the impact of each mediator pathway; these should be compared to identify which pathway has the greatest effect size. The pathway with the largest specific indirect effect, as evidenced by the numerical value and statistical significance (as indicated by CIs not including zero), is considered the strongest mechanism. Required information includes accurate computations of indirect effect sizes for each pathway, the methods used to derive these estimates (such as bootstrapping for CIs), and a comprehensive comparison of these effect sizes to understand their relative strengths in influencing the outcome .

Interpreting results from a model with two moderators is challenging due to the high complexity and potential for interaction effects to obscure direct relationships between the predictor and the outcome. With two moderators, the effect of the predictor can vary across a range of conditions represented by combinations of moderators' levels, making straightforward interpretations difficult. The recommended solution involves using margins to probe these interactions, which allows for analyzing simple slopes of the predictor at different combinations of moderator values and generating visual representations through plots. This technique provides clarity by showcasing how the predictor's effect is contingent on specific combinations of moderator values, thus facilitating understanding of the moderation interaction dynamics .

In reporting the results of a multiple-mediator Structural Equation Modeling (SEM) model, it is essential to include several elements for clarity and completeness. These include: (1) the equations representing the mediation process, including all paths (a-paths, b-paths, and c'-paths); (2) specific indirect effects for each mediator with confidence intervals to highlight the significance and contribution of each mediator to the outcome; (3) the total indirect effect as the sum of specific indirect effects; (4) the direct effect of the predictor on the outcome after accounting for mediation; (5) the total effect combining direct and indirect effects. Additionally, the report should present well-structured tables and narrative interpretations to enhance understanding and allow examiners to follow the logical process of the analysis .

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