Interpretation of Linear Log Model
Posted: Thu May 14, 2020 11:24 pm
HI guys,
I have some issues with interpreting one of my independent variables. The setup is as follows:
Independent variable: log of R&D expenses
Dependent variable: profit margin in decimal format (e.g. 0.13 and not 13 %)
How do interpret the beta coefficient of the independent variable in this case? And which formula should I use for this? So far I have been thinking that it measures the expected percentage unit change in financial performance for a percentage change in R&D expenses by using the formula: BETA/100. But I am a bit unsure, since my dependent variable are in decimal format of a percentage number, should I multiply with 100 as well and thus, the formula will only be BETA?
Thanks for all help you can provide!
Regards,
Jesper
I have some issues with interpreting one of my independent variables. The setup is as follows:
Independent variable: log of R&D expenses
Dependent variable: profit margin in decimal format (e.g. 0.13 and not 13 %)
How do interpret the beta coefficient of the independent variable in this case? And which formula should I use for this? So far I have been thinking that it measures the expected percentage unit change in financial performance for a percentage change in R&D expenses by using the formula: BETA/100. But I am a bit unsure, since my dependent variable are in decimal format of a percentage number, should I multiply with 100 as well and thus, the formula will only be BETA?
Thanks for all help you can provide!
Regards,
Jesper