n terms of the model parameters, state the null hypothesis that, after controlling for sales and roe, ros has no effect on CEO salary. State the alternative that better stock market performance increases a CEO’s salary.

College Algebra
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ISBN:9781938168383
Author:Jay Abramson
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Chapter6: Exponential And Logarithmic Functions
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In terms of the model parameters, state the null hypothesis that, after controlling for sales and roe, ros has no effect on CEO salary. State the alternative that better stock market performance increases a CEO’s salary.
Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe,
in percentage form), and return on the firm's stock (ros, in percentage form):
log(salary) = Po + P₁ log(sales) + B₂roe + B3ros + μ
Using the data in CEOSAL1, the following equation was obtained by OLS:
log(salary) = 4.32 +0.28 log(sales) + 0.0174roe + 0.00024ros
(0.0041) (0.00054)
(0.32) (0.035)
n = 209, R² = 0.283
Transcribed Image Text:Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (roe, in percentage form), and return on the firm's stock (ros, in percentage form): log(salary) = Po + P₁ log(sales) + B₂roe + B3ros + μ Using the data in CEOSAL1, the following equation was obtained by OLS: log(salary) = 4.32 +0.28 log(sales) + 0.0174roe + 0.00024ros (0.0041) (0.00054) (0.32) (0.035) n = 209, R² = 0.283
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