The following table showing the results of two multiple regressions appears in “Does the Composition of the Compensation Committee Influence CEO Compensation Practices?” (Financial Management [1999]: 41– 53). The dependent variable is log(compensation).
a. Do both regressions show a similar pattern?
b. What is the value of the standard error for the coefficient corresponding to the log of sales for the 1992 regression?
c. For the 1991 regression, which variable would be considered first in a backward elimination variable selection procedure? Would it be eliminated?
d. Would the same variable identified in Part (c) be the first to be considered in a backward elimination process for the 1992 regression?
e. Assuming the number of observations is 160, determine the P-value for a test of the hypothesis that b1 in the 1991 model is negative.
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