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Re: st: nonlinear N effect

From   Boris Peko <>
Subject   Re: st: nonlinear N effect
Date   Wed, 6 Mar 2013 14:09:18 +0100

My analysis is effect on managerial ownership on company's value and I
use panel models.
Ho is that man.own has unlinear effect (N-shape) on company's value.
Other authors have predetermined inflection (or turning) points of 5%
and 25% but I want to find out
techniques to find those points.

2013/3/6 Maarten Buis <>:
> On Wed, Mar 6, 2013 at 12:14 PM, Boris Peko wrote:
>> Hi! I have a non-linear effect but not U-shape or reverse U-shape.
>> Effect is N-shaped, dependent variable rises, then fell, then rises.
>> How can I test that in Stata?
>> More important, what method should I use if I do not want to use
>> predetermined inflection point?
> The test depends on the _exact_ null hypothesis and the method you
> used to estimate your model.
> One possibility would be to add a third degree polynomial (cubic
> curve), which could be an N-shaped curve. The extrema of this curve
> have a closed form solution, so you can quickly look if the turning
> point happen within the range of the data. -orthpoly- could be useful
> for reducing multicolinearity and improving the stability of the
> estimates. However, a cubic curve is often too restrictive and too
> sensitive to outliers for my taste, just as a second degree polynomial
> (quadratic curve) is often too restrictive and too sensitive to
> outliers for hypothesised U-shaped and reverse U-shaped curves.
> A better alternative would probably be -fracpoly-, but this also
> depends on all kinds of details of your data, the substantive
> background of your study, tribal habits within your
> (sub-(sub-))discipline, etc..
> Hope this helps,
> Maarten
> ---------------------------------
> Maarten L. Buis
> Reichpietschufer 50
> 10785 Berlin
> Germany
> ---------------------------------
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