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Statistics and Econometrics - R Data - Statistics Assignment help
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Statistics Assignment help
Task: Using the data set ceosal1.RData to answer the following questions. Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in basis point), and return on the firm’s stock (ros, in basis points): log(salary) = ?0 + ?1 log(sales) + ?2roe + ?3ros + u- In terms of the model parameters, state the null hypothesis that, after controlling for sales and roe, ros has no effect on CEO salary. State the alternative that better stock market performance increases a CEO’s salary.
- Estimate the model and report your results. By what percentage is salary predicted to increase if ros increases by 50 basis points (i.e., ros increases by 50)? Does ros have a practically large effect on salary?
- Test the null hypothesis that ros has no effect on salary against the alternative that ros has a positive effect. Carry out the test at the 10% significance level (please show clearly the test statistic and the critical value used in your testing). Would you include ros in a final model explaining CEO compensation in terms of firm performance?
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