The following table was created using the data in CEOSAL2, where standard errors are in parentheses below the coefficients: are Dependent Variable: log(salary) (2) .158 (.040) .112 (.050) -.0023 (.0022) Independent Variables (3) .188 (.040) .100 (.049) -.0022 (.0021) (1) log(sales) 224 (.027) log(mktval) profmarg Dependent Variable: log(salary) Independent Variables (1) (2) (3) ceoten .0171 (.0055) -.0092 (.0033) comten intercept 4.94 4.62 4.57 (0.20) (0.25) (0.25) Observations 177 177 177 R-squared .281 .304 .353 The variable mktval is market value of the firm, profmarg is profit as a percentage of sales, ceoten is years as CEO with the current company, and comten is total years with the company. (i) Comment on the effect of profmarg on CEO salary. (ii) Does market value have a significant effect? Explain. (iii) Interpret the coefficients on ceoten and comten. Are these explanatory variables statistically significant? (iv) What do you make of the fact that longer tenure with the company, holding the other factors fixed, is associated with a lower salary?

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Author:Amos Gilat
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The following table was created using the data in CEOSAL2, where standard errors are in parentheses
below the coefficients:
are
Dependent Variable: log(salary)
(2)
.158
(.040)
.112
(.050)
-.0023
(.0022)
Independent Variables
(3)
.188
(.040)
.100
(.049)
-.0022
(.0021)
(1)
log(sales)
224
(.027)
log(mktval)
profmarg
Transcribed Image Text:The following table was created using the data in CEOSAL2, where standard errors are in parentheses below the coefficients: are Dependent Variable: log(salary) (2) .158 (.040) .112 (.050) -.0023 (.0022) Independent Variables (3) .188 (.040) .100 (.049) -.0022 (.0021) (1) log(sales) 224 (.027) log(mktval) profmarg
Dependent Variable: log(salary)
Independent Variables
(1)
(2)
(3)
ceoten
.0171
(.0055)
-.0092
(.0033)
comten
intercept
4.94
4.62
4.57
(0.20)
(0.25)
(0.25)
Observations
177
177
177
R-squared
.281
.304
.353
The variable mktval is market value of the firm, profmarg is profit as a percentage of sales, ceoten is
years as CEO with the current company, and comten is total years with the company.
(i) Comment on the effect of profmarg on CEO salary.
(ii) Does market value have a significant effect? Explain.
(iii) Interpret the coefficients on ceoten and comten. Are these explanatory variables statistically
significant?
(iv) What do you make of the fact that longer tenure with the company, holding the other factors
fixed, is associated with a lower salary?
Transcribed Image Text:Dependent Variable: log(salary) Independent Variables (1) (2) (3) ceoten .0171 (.0055) -.0092 (.0033) comten intercept 4.94 4.62 4.57 (0.20) (0.25) (0.25) Observations 177 177 177 R-squared .281 .304 .353 The variable mktval is market value of the firm, profmarg is profit as a percentage of sales, ceoten is years as CEO with the current company, and comten is total years with the company. (i) Comment on the effect of profmarg on CEO salary. (ii) Does market value have a significant effect? Explain. (iii) Interpret the coefficients on ceoten and comten. Are these explanatory variables statistically significant? (iv) What do you make of the fact that longer tenure with the company, holding the other factors fixed, is associated with a lower salary?
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