regression question

johnron

New Member
Joined
Sep 15, 2014
Messages
1
hello!!
iwant to examine what are the factors that influence the change in the profits of firms (thats my Y in the regression).
My independent variables are – sales; year; big (examine by log on total assets)
Sales – should I check the change from one year to another or should I just insert the numeric value of sales each year?
Year – should I make a dummy variable for each year or should I do it like this:
2010 – 0
2011 – 1
2012 – 2
2013 -3
Big – I want to check the difference between small to big firms
Should I do it with a dummy variable or should I use the numeric values of the log(total assets)?

Thanks in advance!

 

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The year is not really a variable in that each year is one different from the last. I would remove it. Dummy variables should really on be 0 or 1. As with all regeression you can trial and error to get a good model. I would start with sales and total assets.
 
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