Controlling for industry on my Panel Data dissertation

[Harry Ruane]

Hi everyone, I am writing a dissertation on the impact of ESG scores on FTSE companies financial performance. I have my data organised in a panel. My control variables are size, leverage, capex, board size, sales and industry. There are 11 industries:

• Energy
• Materials
• Industrials
• Utilities
• Healthcare
• Financials
• Consumer Discretionary
• Consumer Staples
• Information Technology
• Communication Services
• Real Estate

I have assigned each company to an industry. How do i actually control for this? I know its to do with dummies but im not sure.

My model thus far is:

Return on assets (it) = ESG(it) + Size(it) + leverage(it) + capex(it) + boardsize(it) + sales(it)



Thanks!

[George Ford]

let ind be the industry identifier (must be numeric)
time be the time variable

xtset ind time
xtreg y x1 x2 x3 x4 , fe cluster(id)

cluster may be a bit iffy here with only 11 industries.

[Harry Ruane]

thanks for the response. I am bit of a novice and struggling; my panel data is from 2017 to 2021. i have put xtset Company year. How do i make my industry numeric? sorry if i sound particularly dumb!

[George Ford]

egen ind = group(Company)