The following table was created using the data in CEOSAL2.RAW, where standard errors are in parentheses below the coefficients:
|
Independent Variables
|
Dependent Variable: log(salary)
(1) (2)
|
(3)
|
|
log(sales)
|
.224
(.027)
|
.158
(.040)
|
.188
(.040)
|
|
log(mktval)
|
--
|
.112
(.050)
|
.100
(.049)
|
|
profmarg
|
--
|
2.0023
(.0022)
|
2.0022
(.0021)
|
|
ceoten
|
--
|
--
|
.0171
(.0055)
|
|
comten
|
--
|
--
|
2.0092
(.0033)
|
|
intercept
|
4.94
(0.20)
|
4.62
(0.25)
|
4.57
(0.25)
|
|
Observations
R-squared
|
177
.281
|
177
.304
|
177
.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.
(1) Comment on the effect of profmarg on CEO salary.
(2) Does market value have a significant effect? Explain.
(3) Interpret the coefficients on ceoten and comten. Are these explanatory variables sta- tistically significant?
(4)What do you make of the fact that longer tenure with the company, holding the other factors fixed, is associated with a lower salary?