c

c c

c
c
c
c 

c cc
c cc
c
ccc
c
c
c
c
c
c
c
c
c
c
c À

 


c À  

c 



c 


c
c
 Rc
      
  

 
H0: ^= 0

H0: 1= 0

H0: 2= 0

H0: 3= 0

H0: 4= 0

H0: 5= 0

H0: 6= 0

H0: 7= 0

where,

0 = intercept
1 = coefficient of age
2 = coefficient of years with company
3 = coefficient of years with CEO at company
4 = coefficient of firm sales, 1990
5 = coefficient of profits, 1990
6 = coefficient of market value, 1990
7 = coefficient of profit margin, 1990




   

 ! 
"!# 
$   %&'(    % 
$   ) 
$* +$
     %) $ %%$#
),    


  )


c
log.Y = 4.542 + (.115) o3 + (.261)log.4

Î c
log.Y = 4.638 + (.099) o3 + (.250)log.X 6 ʹ (.004)X 7 ʹ (.445)X F

c
Before selecting the variables, normality of data was measured for improving the result of
the model, data was transformed. All the related variables were taken into study and with
the help of stepwise method, where regression coefficients of three independent variables
were significant at o.o5 significance level and the rest were excluded.
á 
ccc  
c
All the variables added in the model should have a positive beta coefficient because it has a
direct relationship with all independent variables.


c 
cc

 c


c 
cc

 c

c
  $  % 

$ %%$   % $ %%$
$  *
+$  -,   $  %  $ %%$%$ 
%% .    

/ & %%$

áales, 1990 .261
Years as CEO at company .115
Years at company .000
Age in years -.012
Profits, 1990 .058
Profit Margin, 1990 -.042
Market Value, 1990 .176

With change in unit of each independent variable there will be change in the salary of the
stated proportion that will add up to the intercept of the linear model. Though age increases
or profit margin improves it should have a positive impact on the salary of the CEO rather
than adversely affecting the compensation received showed in the model above.

Relationship between áalary and the set of independent variables explained above can be
stated positive in the case of áales, years as CEO, and years at company, profits, and market
value. Years of age and profit margin deteriorates the salary as its beta relates with salary it
negatively.

All the values have been tested at a significance level of 0.05, where the tested null
hypothesis of intercept and coefficient of sale, years as CEO, and years at company are
significant. This means there values are not equal to zero.


0 1 $   

 % 

  23%$ $ 

F-statistics of ANOVA, at a significance level of 0.05, shows that the amount of error
explained by this regression model is significant. The value of resid ual error has substantially
decreased by applying the given Regression model.

24 ,
*$   $

 % 

+ - 
The amount of variance explained by these models can be measure through the R square. It
shows that the final model of ! explains 37.8% of the variation in the data; whereas, with
the help of "! we can explain 34.7% of the variation in the data.

 $   )%$ 

$   -
With the help of beta coefficient we can measure the relative strength of th e independent
variables which significantly predicts the independent variable. Coefficient of sales having a
beta of .607 can be considered the independent variable that significantly predicts the
salary of CEO.
 
$%   
5
$
$ 
 
*$  - 

Through studying residuals and predictors we can conclude that there is a null plot and with
the help of insignificant Kolmogrov-ámirnov test, at a 0.05 significance level, we can accept
out null hypothesis that the residuals fit the normal curve. This means that the results
exhibit normality and homoscedasticity. With the help of multicollinearity statistics we can
conclude that Tolerance and VIF are satisfactory, and there is a lack of multicollinearity in
the model explained below.

RcR)c
c
Rc)c