Dear all, I want to run Kothari et al. (2005) model for accruals but I don't know
1-How to get the performance matched ROA(what is the command to do this on STATA)?
2- Also whether to include a constant or no constant in the model? as in their article they said they are using a constant but everywhere else researchers are assuming no constant so am a bit confused.
ROA performance matching definition In their paper "We match each firm-year observation with another from the same two-digit SIC code and year with the closest return on assets in the current year, ROAit (net income divided by total assets).8 Performance matching is also done on the basis of two-digit SIC code, year and ROAit?1."
1-How to get the performance matched ROA(what is the command to do this on STATA)?
2- Also whether to include a constant or no constant in the model? as in their article they said they are using a constant but everywhere else researchers are assuming no constant so am a bit confused.
ROA performance matching definition In their paper "We match each firm-year observation with another from the same two-digit SIC code and year with the closest return on assets in the current year, ROAit (net income divided by total assets).8 Performance matching is also done on the basis of two-digit SIC code, year and ROAit?1."
