Dear users,
I have a question regarding the handling of outliers in a log-log regression framework.
I want to winsorize the independent variable at the 1st and 99th percentile, and I was wondering whether to do that before or after log-transforming it.
I should add that I am well aware of the myriad problems of removing outliers in general and winsorizing in particular and am considering outlier-robust specifications. I still want to conduct an anaylsis using winsorization, bc a lot of the reference literature in the field (corporate finance, innovation) uses winsorization approaches when working with financial ratios where the numerator or denominator can get close to zero.
Thanks in advance,
Christian
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