From a sample of 209 firms, Wooldridge obtained the following regression
results*:
log (!salary ) = 4.32 + 0.280 log (sales) + 0.0174 roe + 0.00024 ros
se = (0.32) (0.035) (0.0041) (0.00054)
R2 = 0.283
where salary = salary of CEO
sales = annual firm sales
roe = return on equity in percent
ros = return on firm's stock
and where figures in the parentheses are the estimated standard errors.
a. Interpret the preceding regression taking into account any prior expectations that you may have about the signs of the various coefficients.
b. Which of the coefficients are individually statistically significant at the 5% level?
c. What is the overall significance of the regression? Which test do you use? And why?