Question
QUESTION 53 You examine the relationship between firm performance (dependent variable) and CEO pay (independent variable). If your regression results give an R2 of 0.354,
QUESTION 53
You examine the relationship between firm performance (dependent variable) and CEO pay (independent variable). If your regression results give an R2 of 0.354, what does this mean?
a. Less than half of the total variability of firm performance (across firms) is explained by the model
b. Because the model explains only just over a third of the variation in firm performance, important variables other than CEO pay have
obviously been omitted and should be included.
c. It is a poor model and CEO pay is not a statistically significant determinant of performance.
d. The relationship between performance and pay must be non-linear.
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Finance Applications And Theory
Authors: Marcia Millon Cornett, John R. Nofsinger, Troy Adair
3rd International Edition
1259252221, 9781259252228
