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Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in percentage form), and return on the firm's stock (ros, in percentage form): log(salary) = Po + B₁ log(sales) + B₂roe + B3ros +μ Using the data in CEOSAL1, the following equation was obtained by OLS: log(salary) = 4.32 +0.28 log(sales) + 0.0174roe + 0.00024ros (0.0041) (0.00054) (0.32) (0.035) n = 209, R² = 0.283

Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in percentage form), and return on the firm's stock (ros, in percentage form): log(salary) = Po + B₁ log(sales) + B₂roe + B3ros +μ Using the data in CEOSAL1, the following equation was obtained by OLS: log(salary) = 4.32 +0.28 log(sales) + 0.0174roe + 0.00024ros (0.0041) (0.00054) (0.32) (0.035) n = 209, R² = 0.283

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter5: Inverse, Exponential, And Logarithmic Functions
Section: Chapter Questions
Problem 15DE
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Would you include ros in a final model explaining CEO compensation in terms of firm performance?
Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in percentage form), and return on the firm's stock (ros, in percentage form): log(salary) = Po + P₁ log(sales) + B₂roe + B3ros + μ Using the data in CEOSAL1, the following equation was obtained by OLS: log(salary) = 4.32 +0.28 log(sales) + 0.0174roe + 0.00024ros (0.0041) (0.00054) (0.32) (0.035) n = 209, R² = 0.283
Transcribed Image Text:Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in percentage form), and return on the firm's stock (ros, in percentage form): log(salary) = Po + P₁ log(sales) + B₂roe + B3ros + μ Using the data in CEOSAL1, the following equation was obtained by OLS: log(salary) = 4.32 +0.28 log(sales) + 0.0174roe + 0.00024ros (0.0041) (0.00054) (0.32) (0.035) n = 209, R² = 0.283
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