Results of a study reported in Financial Analysts Journal include a simple linear regression analysis of firms’ pension funding (Y) versus profitability (X). The regression coefficient of determination is reported to be r2 = 0.02. (The sample size used is 515.)
a. Would you use the regression model to predict a firm’s pension funding?
b. Does the model explain much of the variation in firms’ pension funding on the basis of profitability?
c. Do you believe these regression results are worth reporting? Explain.