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  • How to avoid value "1" is dropped in dummy interaction

    Hi All,
    In the below example I want to see the interaction effects of two firm types i.e. "Family_firm" (1=family firm, 0 otherwise) and "Public_Firms" (1=public firms, 0 otherwise) those have "Political_Connection" (1=have political connection, 0 otherwise). However, the regression always drop the value "1" of "Political_Connection" and value "1" of these two firm types (as example in red below). Therefore, I cant evaluate such effects on these two different firm types. Please advice how should i deal with this problem. I used Feasible Generalized Least Square Regression and the command is:

    xtgls ROA i.Family_firms##i.Political_Connection i.Public_Firms##i.Political_Connection...(with control variables, but i removed to make it short here).

    Thank you all in advance!!
    Jackson
    VARIABLES ROA
    0b.Family_firms#0b.Political_Connection 0
    (0)
    0b.Family_firms#1.Political_Connection 0.799***
    (0.172)
    1.Family_firms#0b.Political_Connection -0.224
    (0.217)
    1.Family_firms#1.Political_Connection 0
    (0)
    0b.Public_Firms#0b.Political_Connection 0
    (0)
    0b.Public_Firms#1.Political_Connection 0.831***
    (0.0868)
    1.Public_Firms#0b.Political_Connection 0.598***
    (0.205)
    1o.Public_Firms#1o.Political_Connection 0
    (0)
    Debt_to_Asset -7.859***
    (0.157)
    Debt_to_Equity -0.443***
    (0.0271)
    ln_TT_Asset 0.00866
    (0.0414)


  • #2
    This was reposted in the more appropriate location of the General Forum, so if you have an answer, please post it to the topic at
    http://www.statalist.org/forums/foru...e-1-is-dropped

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