Please use "RStudio script" or "RMarkdown" for your analysis and clearly explain your steps and commands. Interpret all your findings.
Please upload your answers with interpretations and necessary explications for the steps of analysis that you did (using "pdf," "free office," or "Word" format).
Please show your codes.
1. The file CEOSAL2.DTA contains data on 177 chief executive officers and can be used to examine the effects of firm performance on CEO salary. You can find description of variables in the table.
a. Estimate a model relating annual salary to firm sales and market value (all variables in log form). Write the results out in equation form.
b. Add profits to the model from part (a). Why can this variable not be included in logarithmic form? Would you say that these firm performance variables explain most of the variation in CEO salaries?
c. Add the variable ceoten to the model in part (b). What is the estimated percentage return for another year of CEO tenure, holding other factors fixed?
d. Find the sample correlation coefficient between the variables log(mktval) and profits. Are these variables highly correlated? What does this say about the OLS estimators?
e. Which statistics is better to compare explanatory power of estimated models?
f. Using available variables please find best model and interpret the results