I am trying to run a Fama-MacBeth regression with multiple independent variables. The dependent variable is the firm bond return this month, the independent variables are the lagged bond returns for each of the last 12 months. However, due to my construction method, the returns of some months cannot be calculated and I set them to missing values. The problem is that when I ran the FM regression with lagged 12 month returns, STATA will automatically drop the observations with even one missing return in the last 12 months. And this more than halved the number of observations I have. As a result, I do not have enough statistical power.
Is there a way in STATA to adjust the missing variables problem in FM regression? Thanks a lot!
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