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st: Metareg: meta-regression and squared term

From   "Maurizio La Rocca" <>
To   <>
Subject   st: Metareg: meta-regression and squared term
Date   Fri, 4 Jun 2010 15:11:31 +0200

Please, I would like a support in my meta-regression analysis concerning a financial management topic.

I'm investigating the moderator role of ownership, the percentage of shares that managers own of a firm, on the relation between debt (as explanatory variable) and firm's value (my dependent variable). The theoretical literature suggests the existence of complementarity between Debt and Ownership in affecting firm's value. I want to verify if this is true and if ownership amplifies or reduces the effect of Debt on Firm's Value. I'm using the metareg command. I calculated the effect size of the effect of Debt on Value (Zd-w) and this is my dependent variable in the meta-regression. Then I use a Dummy Ownership (D_O), that is a dummy equal to 1 if the study account for ownership or 0 otherwise, to see if the effect of Debt on Value is affected by the inclusion in the model of the variable Ownership.

Here my question.

Due to the fact that in some paper it is also included the squared term of Ownership, because it is possible a non linear relation between Ownership e Value, it is methodologically correct to include in the meta-regression also a Dummy Ownership Squared (D_O2) that is a dummy equal to 1 if the variable ownership squared is present in the study to account for a quadratic functional form or 0 otherwise. Theoretically, the effect of ownership on the relation between debt and value can be different for low or high level of ownership . thus, if I include in the meta-regression D_O and D_O2 I should account for this . is it true?

Thanks a lot in advance for any suggestion.

Maurizio La Rocca
Assistant Professor in Business Economics, Management and Finance
University of Calabria - Italy

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