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It may still bother you that MV has no significant effect, but that is
what the analysis shows.

I would not ordinarily want to calculate a ratio of slopes in such a
model, even if both slopes were positive and significantly different
from zero.  I don't recall whether you explained why the ratio would
be of interest.

David Hoaglin

On Fri, May 10, 2013 at 7:29 AM, Nahla Betelmal <nahlaib@gmail.com> wrote:
> Thanks again, I will give it a go. However, back to the original
> model, instead of describing the effect of MV on earnings management
> by overconfident mangers in ratio terms, I think it is sensible to say
> excessively overconfident bidders have a greater incentive to manage
> earnings via accruals, approximately 5.96 cents more than rational
> bidders for each dollar increase, for MV.
>
> What bothers me is that MV has negative effect on earnings management
> for rational managers (negative slope -0.056) and positive intercept,
> while the effect is positive but really small (positive slope 0.003)
> and it does not make sense to divide the two slopes in this case to
> get the effect ratio. Well, I wanted to present the result in the
> common way of ratios but I have to accept the mechanical aspect of
> mathematics.
>
> Many thanks for your reply and for the log advice
>
> Nahla
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