Question: The following table shows the multivariate linear regression results for CEO compensation (in thousands). The R value is equal to 0.85. Explanatory Variables Coefficient Standard

The following table shows the multivariate linear regression results for CEO compensation (in thousands). The R value is equal to 0.85.

Explanatory Variables Coefficient Standard Error

  • Constant 7,050 220
  • Assets ($billions), A 12.2 0.80
  • No of Employees (000s), L 8.14 5.40
  • Shareholder Return, S 7.26 1.91
  • Experience (years), E 63.70 18.68
  1. The number of employees L does not have a statistically significant effect on CEO compensation.
  2. We know that no factor other than A, L, S and E has an effect on CEO compensation.
  3. All four variables have statistically significant effects on CEO's compensation (at the 95% confidence level).
  4. Shareholder return S does not have a statistically significant effect on CEO compensation.

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