The above picture is an excerpt from a paper I am reading. (Roads and Loans, Review of Financial Studies). I think based on the reporting of the results from the authors, beta1 is their interest? Is that correct? But even if so, what are the other variables doing here? Also, if one wants to include an interaction effect, shouldn't the authors also include the front term of beta2 as a control? (Similar to beta3 being the front term of beta4).
