Assuming you are analysing the determinant of corporate investment, measured by capital expenditure. You have now collected 50 companies data over 2000-2019. Please answer Question 1-2

Question 1

Assume you want to examine the impact of firms growth opportunities, measured by book to market ratio, on corporate investment in a regression framework. Write down the regression model you would like to use and discuss which variables you will include in your regression, and why you will include those variables.

Question 2

If the coefficient of book to market is positive and statistically significant at 1%, what conclusion can you draw from it?