Question: In Problem 4.2, we added the return on the firm's stock, ros, to a model explaining CEO salary; ros turned out to be insignificant. Now,

In Problem 4.2, we added the return on the firm's stock, ros, to a model explaining CEO salary; ros turned out to be insignificant. Now, define a dummy variable, rosneg, which is equal to one if ros < 0 and equal to zero if ros < 0. Use CEOSAL1 .RAW to estimate the model
log(salary) = (0 + (1 log(sales) + (2 roe +(3 rosneg + u.
Discuss the interpretation and statistical significance 3?

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The estimated equation is log salary 430 288 log sales 0167 roe 226 rosneg 029 034 0040 ... View full answer

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