****USING R Consider an equation to explain salaries of CEOs in terms of annual

Question

****USING R

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) = 0 + 1 log(sales) + 2roe + 3ros + u

First, what is the formula to input in R in order to estimate this? If you cannot answer because there is no file, please give me the formula to enter in R. The file name is "ceo.xlsx"

1. Test the null hypothesis that ros has no effect on salary using the estimated model. Would you include ros in a final model explaining CEO compensation in terms of firm performance?

Explanation / Answer

Sol:

read the CSV into R as:

let’s fit the model. Be sure to specify the parameter family=binomial in the glm() function.

By using function summary() we obtain the results of our model:

summary(model)

Now we can run the anova() function on the model to analyze the table of deviance

KINDLY PROVIDE THE DATA

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