The Stata file ceosalary.dta contains data on the characteristics of 177 chief executive o?cers, which we will use to examine the e?ects of firm performance on CEO salary. The variables in the dataset include
1. salary (1990 compensation, $1000s),
2. age (in years),
3. college ( if attended college),
4. grad ( if attended graduate school),
5. comten (years with company),
6. ceoten (years as ceo with company),
7. sales (1990 firm sales, millions),
8. prof its (1990 profits, millions),
9. mktval (market value, end 1990, millions).
1. Estimate a regression of salary on firm sales and market value in constant elasticity (log-log) form. Interpret the e?ects of sales and market value on salaries of CEOs
2. Add prof its and ceoten to the model. Which firm characteristics are significant determinant of salaries? Interpret the e?ect of an additional year of CEO tenure on salaries.
3. Estimate a regression of log(salary) on log(sales), log(mktval), prof mar (prof its/sales), comten and ceoten. Interpret the e?ects of ceoten and comten
4. Using an appropriate restricted regression, test the hypothesis that none of the 3 firm performance variables matter for CEO salaries.
5. Using an appropriate restricted regression, test the hypothesis that comten and ceoten have equal and opposite e?ects on log(salary).