Hello All,
I have a very similar question; I intend to estimate the impact of debt on firm's sales revenue. In doing so, I regress;
Sales Revenue = f(Debt, Profitability, Marketing Expenses and some other control variables). I had earlier deflated all of my variables (explanatory as well as dependent) with Total Assets, but as it is important to keep Size of the firm (which is measured by Total Assets) as a control variable I cannot use it as a deflator in my dependent variable.
Therefore, I want to ask, can I just deflate my explanatory variables with respect to Total assets, keep assets as a control variable too, and deflate my outcome variable with respect to prices (so as to be real). By doing this, my regression is;
Real Sales Revenue = f(debt/assets, PAT/assets and Log assets).
Is this appropriate ? Please help!!
I have a very similar question; I intend to estimate the impact of debt on firm's sales revenue. In doing so, I regress;
Sales Revenue = f(Debt, Profitability, Marketing Expenses and some other control variables). I had earlier deflated all of my variables (explanatory as well as dependent) with Total Assets, but as it is important to keep Size of the firm (which is measured by Total Assets) as a control variable I cannot use it as a deflator in my dependent variable.
Therefore, I want to ask, can I just deflate my explanatory variables with respect to Total assets, keep assets as a control variable too, and deflate my outcome variable with respect to prices (so as to be real). By doing this, my regression is;
Real Sales Revenue = f(debt/assets, PAT/assets and Log assets).
Is this appropriate ? Please help!!
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