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  • How to test the effects of linkage between dependent and independent variables?

    There is a hypothesis: The linkage between corporate carbon and accounting-based financial performance is less negative for firms subject to the EU ETS as compared to non-regulated firms.
    In this accounting-based financial performance is a dependent variable and carbon performance is independent variable. For this first I did regression for EU ETS and then for non-regulated firms where EU ETS is a dummy variable. But I don't know how to proceed further and whether this is the right approach.

  • #2
    Tanmaya:
    welcome to this forum.
    Your question is probably too vage to get helpful replies.
    See the FAQ on how to post more effectively. Thanks.
    That said, you may consider interacting the two predictors:
    Code:
    regress financial_performance i.EU_ETS##c.corporate_carbon///I assume that -corporate_carbon- is a continuous variable
    Kind regards,
    Carlo
    (StataNow 18.5)

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