Hello,

Can you please tell me if my interpretation is correct?

In model (1), with an estimated coefficient of -.0187 the dummy for the second year of observations is negative and significant on the one percent level. That means minus 18.7 percent post treatment change for the untreated individuals or in other words, non-adopting firms sell, on average, 18.7 percent less, ceteris paribus. The ICT adoption dummy, significant at the five percent level, is the pre-treatment difference between treated and untreated. With an estimated coefficient of 0.543, this indicates an average pre-treatment difference in sales of 54.3 percent for treated over untreated firms. This indicates that firms who adopt ICT between year 1 and 2 already had on average higher sales than those who did not, ceteris paribus. As a consequence, have I simply compared outcomes of treated and untreated firms in year 2, the estimated effect of the treatment would have been biased upwards. The interaction term between the second year dummy variable and ICT adoption is significant at the one percent level. The estimated coefficient is 0.444, this means that for ICT adopted firms between year one and year two, sales increased on average by 44 percent more than that of non-adopting firms, ceteris paribus. [Add -18.7 to 44.4 to get wave on wave % change in sales for adopting firms]

Code:
. xtreg LogSales c.dum_ICT##(c.Year2 c.LogFirmSize c.c6) c.LogFirmAge c.b2b i.Cid, vce(cluster i)

Random-effects GLS regression                   Number of obs     =      7,720
Group variable: i                               Number of groups  =      4,404

R-sq:                                           Obs per group:
     within  = 0.1352                                         min =          1
     between = 0.7384                                         avg =        1.8
     overall = 0.6387                                         max =          2

                                                Wald chi2(35)     =   15608.20
corr(u_i, X)   = 0 (assumed)                    Prob > chi2       =     0.0000

                                             (Std. Err. adjusted for 4,404 clusters in i)
-----------------------------------------------------------------------------------------
                        |               Robust
               LogSales |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
------------------------+----------------------------------------------------------------
                dum_ICT |   .5432373   .2749938     1.98   0.048     .0042594    1.082215
                  Year2 |  -.1868714   .0473769    -3.94   0.000    -.2797284   -.0940144
            LogFirmSize |   1.089397   .0223518    48.74   0.000     1.045588    1.133206
                     c6 |   .2488145   .0614796     4.05   0.000     .1283166    .3693123
                        |
      c.dum_ICT#c.Year2 |   .4444767   .1238044     3.59   0.000     .2018246    .6871288
                        |
c.dum_ICT#c.LogFirmSize |  -.1248695   .0388428    -3.21   0.001    -.2010001   -.0487389
                        |
         c.dum_ICT#c.c6 |    -.36005   .1789319    -2.01   0.044      -.71075     -.00935
                        |
             LogFirmAge |   .3055828   .0500255     6.11   0.000     .2075346     .403631
                    b2b |   .0089473   .0007782    11.50   0.000     .0074221    .0104724
                        |
                    Cid |
                    11  |   .7668476   .1964145     3.90   0.000     .3818822    1.151813
                    12  |  -3.297935   .1730777   -19.05   0.000    -3.637161   -2.958709
                    13  |   .7270781   .2315544     3.14   0.002     .2732398    1.180916
                    14  |  -.6149425   .2143766    -2.87   0.004    -1.035113    -.194772
                    15  |   .6948599   .1602769     4.34   0.000     .3807231    1.008997
                    16  |   .9412395   .2486655     3.79   0.000     .4538641    1.428615
                    17  |   .2757622   .1949146     1.41   0.157    -.1062633    .6577877
                    18  |   .5553843   .1906491     2.91   0.004      .181719    .9290497
                    19  |   -2.40611   .1583451   -15.20   0.000    -2.716461    -2.09576
                    20  |  -.7922745   .3916108    -2.02   0.043    -1.559818   -.0247314
                    21  |  -.8017934   .1666927    -4.81   0.000    -1.128505   -.4750817
                    22  |  -3.343957   .2024582   -16.52   0.000    -3.740768   -2.947146
                    23  |  -4.023811   .2263285   -17.78   0.000    -4.467406   -3.580215
                    24  |  -.6255861   .1905041    -3.28   0.001    -.9989673   -.2522049
                    25  |   .2832945   .1639983     1.73   0.084    -.0381362    .6047252
                    26  |   1.811988     .24045     7.54   0.000     1.340715    2.283262
                    27  |  -1.585737   .1457486   -10.88   0.000    -1.871399   -1.300075
                    28  |    1.20013   .2273049     5.28   0.000     .7546209     1.64564
                    29  |   .5454183   .1566247     3.48   0.000     .2384396    .8523971
                    30  |   1.615417   .1921696     8.41   0.000     1.238772    1.992063
                    31  |  -2.024318    .165459   -12.23   0.000    -2.348612   -1.700024
                    32  |   1.527866   .1624043     9.41   0.000     1.209559    1.846173
                    33  |   .7318168   .2407154     3.04   0.002     .2600232     1.20361
                    34  |   1.493808    .165864     9.01   0.000     1.168721    1.818896
                    35  |   2.884055   .1547119    18.64   0.000     2.580825    3.187285
                    36  |  -4.552385   .1591759   -28.60   0.000    -4.864364   -4.240406
                        |
                  _cons |   13.48519    .200877    67.13   0.000     13.09147     13.8789
------------------------+----------------------------------------------------------------
                sigma_u |          0
                sigma_e |  1.7565325
                    rho |          0   (fraction of variance due to u_i)
-----------------------------------------------------------------------------------------

I would really appreciate if you can tell me if this is right. Thanks a lot!

Kind regards
Dominik