Fixed effects model

[Marcel Visser]

Dear E-views specialist,

For my thesis, I have a sample of panel data on which I ran the Hausman test. The test indicated that i needed to use a fixed effects model to explain the results of my data accurately. The problem is that for one of the independent variables in my regression, OPRISK, the value stays constant per firm over time. I read somewhere else on this site that this prevents you from using a cross section fixed effect model, which indeed could not be run. However, I believe that the cross section fixed effects on the other independent variables might be important for my regression outcomes. I allready constructed a two digit sic code dummy variable in order to at least control for the industry fixed effects, but i wonder if there is any way in which i can study the cross section fixed effects on my variables which are not stable per firm over time. I hope that you have some advice which enables me to control for both cross section and time fixed effects in my regression.

The regression I try to run is Leverage ratio= c (Financial development) (Inflation) (Marginal tax rate) (OPRISK) (log sales) (profitability) (tangibility)

Kind regards,
Marcel Visser

[Marcel Visser]

Does anyone have suggestions?