Question: A population regression model is specied as L. = a + [3133 + zMa' Bi + ,63EPSi + A , where L: is the leverage

A population regression model is specied as L. = a + [3133 + zMa' Bi + ,63EPSi + A , where L: is the leverage ratio of rm i, Si is the log of total sales of firm i for measuring rm size, M/Bi is the market value of equity divided by book value of equity of firm i, and EPSi is the earnings per share of firm i for measuring firm profitability. Equation 1, as shown below, is the results from using ordinary least squares (OLS) regression estimation based on 100 firm observations: I; = 0.411 + 0.0235,. 0.547(M1' 3),. + 0.1025103, Adj. R2 = 0.12 (Equation 1) (0.055) (0.009) (0.201 ) (0.075) The figures in parentheses below show the estimated standard errors for the coefcient estimates

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