Question
One way to run such a regression in R Studio is as follows: ff
One way to run such a regression in R Studio is as follows:
ff <- fin$FEES
af <- fin$ASSETS
LFF <- log(ff)
LFA <- log(af)
B4F <-factor(fin$BIG4)
resultsf <-lm(LFF~LFA+B4F) summary(resultsf)
Assignment:
What is the predicted audit fees for a bank with $500 million in assets?
How does this number compare with the predicted fee if we used the full dataset (i.e., the entire sample of 4426 observations without deleting the non-financial companies)? (Recall that we did this earlier, and you have the regression results from the full sample.)
Bonus question: How does the predicted audit fee for a bank with $500 million in assets compare with the predicted audit fees for a non-financial firm with $500 million in assets? What are the lessons to learn from such a comparison?
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