Finally, in panel D, we look at recent industry growth. High growth industry can be associated with less collusion (...)We use the three-digit SIC industry median of sales growth as the proxy for maturity of an industry
In panel D, our main variable of interest is the interaction between the passage of the leniency laws and the median lagged 2-year sales growth in the firm’s industry. In Columns 1 our main variable of interest is the interaction term between the passage of the leniency law and the industry growth.
Note: The dependent variable above is asset growth
From my understanding, the industry growth variable is generated for each observation is the median of asset growth of all firms in THIS industry in THIS country in THIS year. I am wondering if it is the correct explanation.
Apart from that, what is the purpose of adding this interaction variable into the equation like that?
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