Hi all,
I'm currently working on my dissertation using Stata and I'm a little confused.
I'm looking to find the determinants of a firm's borrowing source. Regressing debt source/total debt against firm characteristics. I'm also including year dummies for each year 2005-2011 because I want to look at how borrowing sources changed over the course of the financial crisis. I'm getting very confused reading about which regression model to use. I thought because I think there are probably omitted variables I would use fixed effects, but then I'm reading a paper where they've used random, and another similar one that has used a tobit regression with limits at zero and unity (I have no idea about tobit regressions). Fixed effects and random effects seem to give me the same coefficients.
Am I right in interpreting year dummies like this: say there's a coefficient of -0.5 for 2008 (and it's statistically significant), in 2008 on average firms had less than the proportion of this kind of debt than would be predicted by the coefficients of the variables. (0.5 less of this kind of debt as a proportion of total debt?)
Again from this paper using tobit regression, as one of the dependent variables 'leverage' would have similar determinants to the independent variable 'debt source', they have regressed 'leverage' against the other variables and after used 'predict... , residuals' and then used this variable in the regression in the place of 'leverage'. However I get the error message 'option residuals not allowed.' I think because I cannot do this with the regression I'm using? Is there a way around this or shall I just leave this variable out?
Thanks in advance if you can shed some light on any of this.
I'm currently working on my dissertation using Stata and I'm a little confused.
I'm looking to find the determinants of a firm's borrowing source. Regressing debt source/total debt against firm characteristics. I'm also including year dummies for each year 2005-2011 because I want to look at how borrowing sources changed over the course of the financial crisis. I'm getting very confused reading about which regression model to use. I thought because I think there are probably omitted variables I would use fixed effects, but then I'm reading a paper where they've used random, and another similar one that has used a tobit regression with limits at zero and unity (I have no idea about tobit regressions). Fixed effects and random effects seem to give me the same coefficients.
Am I right in interpreting year dummies like this: say there's a coefficient of -0.5 for 2008 (and it's statistically significant), in 2008 on average firms had less than the proportion of this kind of debt than would be predicted by the coefficients of the variables. (0.5 less of this kind of debt as a proportion of total debt?)
Again from this paper using tobit regression, as one of the dependent variables 'leverage' would have similar determinants to the independent variable 'debt source', they have regressed 'leverage' against the other variables and after used 'predict... , residuals' and then used this variable in the regression in the place of 'leverage'. However I get the error message 'option residuals not allowed.' I think because I cannot do this with the regression I'm using? Is there a way around this or shall I just leave this variable out?
Thanks in advance if you can shed some light on any of this.