Regression Analysis Sample

4.1 DATA ANALYSIS AND INTERPRETATION
In this section, the results from the descriptive statistics and the regression analysis are presented. A detailed discussion of the empirical findings and its interpretation is also reported in this section.
Table 1 explains the following list of variables was used in the study to measure its effect on profitability of the firm.
Table 1: List of Variables
VARIABLES DEFINITION TYPE OF VARIABLES
Profitability Log of EBIT Dependent
Degree of Financial Leverage EBT / EBIT Independent
Degree of Operational Leverage % change in EBIT / % change in sales Independent
Liquidity Current Assets / Current Liabilities Independent
Size of the Firm Log of Sales Independent

Descriptive Statistics
Prior to start of formal analysis, the

While selecting between the Pooled OLS and Fixed Effects Model we frame the Hypothesis:
Ho: Fixed Effects Model is not an appropriate model
Ha: Fixed Effects Model is an appropriate model
Since the Prob(F-statistic) is less than 0.05 we reject the null hypothesis and accept the alternative hypothesis. Therefore the Fixed Effect Model is an appropriate model.**
Further I compared the Fixed Effects Model with the Random Effects Model and ran the Hausman Test to choose the appropriate model.
The Hypothesis to choose between Fixed and Random is to be compared with results of Hausman Test.
Ho: Random Effects Model is Appropriate
Ha: Fixed Effects Model is appropriate
Since the P-Value is less than 0.05 we reject the null hypothesis and accept the alternative. Therefore the Fixed effect Model is appropriate.***
Table 4: Panel Data Analysis OLS FEM REM
CONSTANT -2.128869
(0.280730)/[-7.583336] 0.051796
(0.637140)/ [0.081295] -1.898518
(0.304364)/ [-6.237663]
DFL 0.164875
(0.280730)/ [3.071014] 0.096393
(0.047121)/ [2.045638] 0.123892
(0.045549)/ [2.719974]
DOL