Parallel trend assumption plot

[Noah Woelki]

Hello everyone,

I am currently working on an DID analysis of my dataset and require to plot a parallel trend assumption plot.

My data is structured as followed:

. list CompanyName time xDivPerShare treated in 1/40


+-----------------------------------------------------+
| CompanyName      time     xDivPe~e           treated |
|-----------------------------------------------------|
1. | Comp1          2007    0.25                   1 |
2. | Comp1          2008    0.4                 1 |
|-----------------------------------------------------|
11. | Comp2        2007     0                   1 |
12. | Comp2        2008     0.13              1 |
|-----------------------------------------------------|
21. | Comp3       2007      .11                0 |
22. | Comp3       2008      .7                  0 |
|-----------------------------------------------------|

The goal is to plot the mean of the variable DivPerShare for the groups where treated == 0 and treated == 1 respectively for the years 2007-200x. I inserted just a few lines of the dataset here.
I found out that I most likely have to use something like -collapse- in order to get something like a mean for each year over all companies in group "treated == 0" before i can plot that.

I went through this thread https://www.statalist.org/forums/for...end-assumption
already but somehow could not understand how to apply this to my specific case.

If you need more information I am happy to provide more details.
Maybe someone here has some experience with that and can help me out.
Thank you in advance for any help!

Best

[Daniel PV]

Hi, following your example:

clear
input str10 CompanyName  float(time xDivPerShare treated)
comp1 2007 0.25 1
comp1 2008 0.4  1
comp2 2007 0    1
comp2 2008 0.13 1
comp3 2007 0.11 0
comp3 2008 0.7  0 
end

collapse (mean) xDivPerShare, by(time treated)
sort treated time
tw line xDivPerShare time if treated==0 || line xDivPerShare time if treated==1, xlabel(#2)

[Noah Woelki]

Daniel PV thank you so much that is exactly what I was looking for!

Could you just briefly explain what the xlabel(#2) does to the graph, or what it is used for, as I am not really familiar with plotting in stata?

Thanks again

[Daniel PV]

Sure, I add xlabel(#2) to display only 2 labels on the x-axis. I recommend you to see the help file

help twoway

to see in more detail the syntax of this graph.