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Thread: stating a null and althernate hypothesis

  1. #1
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    stating a null and althernate hypothesis

    model:

    log(salary) = B0 + B1log(sales) +B2roe + B3ros + u

    where salary is CEO salary, sales are firm sales, roe is return on equity in percentage form, ros is return on the firm's stock in percentage form.

    the question is 'controlling for the other variables in the model, state a null hypothesis that says that ros has no effect on CEO salary and an alternate hypothesis that increased market performance increases a CEO's salary.

    I would say H0: B3 =0 and H1: B3>0

    is that correct?
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  2. #2
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    Re: stating a null and althernate hypothesis

    Hey kingsolomonsgrave.

    That looks good but is ros the sole contributor to market performance variable wise? (I'm just curious).
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  3. #3
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    Re: stating a null and althernate hypothesis

    In the example, yes, I think ros is the only variable liked to market performance.
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