Constucting the KZ Index

[Emil Kruse]

Hello everyone,

I have a hard time on how to figure out how to construct the KZ index based on
https://ycharts.com/glossary/terms/k...tock%20Returns.

I understand the logic behind the index itself but I dont know how I can run it in stata
I have accounting data and constructed the variables needed but hereafter I am lost on what to do.

Hopefully some of you have had this issue before and can help me out.

Best regards

Emil

[ayotola owolabi]

Hello Emil, were you able to figure the issue out.

[Nick Cox]

The source given seems rather shaky on conventions such as how to show subtraction, which does not impart confidence, but here is a copy and paste without no endorsement from me

KZ Index = -1.001909 x Cash Flows / K + 0.2826389 x Q + 3.139193 x Debt / Total Capital + '-39.3678 x Dividends / K + -1.314759 x Cash / K

In case it helps, I underline that in Stata variable names may not include spaces, multiplication requires * not x, and + - for subtraction should always be - (bare minus).

I can't be confident what, if anything, is meant by the stray quotation mark.