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plz , i need a short answer and correctly 100% 2. Q7: Consider an equation to explain salaries of CEOs in terms of annual firm
plz , i need a short answer and correctly 100%
2. Q7: Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in percent form) and return on the firm's stock (ros, in percent form) (10 marks) log(salary)= BO+B1 log(sales) + B2 roe + B3 ros + u 1. In terms of model parameters, state the null hypothesis that, after controlling for sales and roe, ros has no effect on CEOS salary. State the alternative hypothesis that better stock market performance increases a CEOs salary. 2. Using the data in CEOSAL1.RAW, the following equation was obtained by OLS: log(salary) = 4.32 +0.280 log(sales) + 0.0174 roe + 0.00024 ros (0.32) (0.035) (0.00054) (0.0041) N= 209, R = 0.283 By what percentage is salary predicted to increase if ros increases by 50 points? Does ros have a practically large effect on salary? 3. Test the null hypothesis that ros has no effect on salary against the alternative that ros has a positive effect. Note that T- tabulated is 1.282 4. Would you include ros in a final model explaining CEO compensation in terms of firm performance? Explain. 5. Interpret the explanation power of the model. * Step by Step Solution
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