Table 6 Selection of the appropriate... | Emerald Publishing

Table 6

Selection of the appropriate model (dependent variable: ROA)

Purpose	Null hypothesis	Test	t-statistics
OLS vs FEM	All ui = 0 (null hypothesis: There is no difference in intercepts of all the sample firms if considered individually)	Restricted F-test	F(71, 326) = 3.54^***
OLS vs REM	^σ2u = 0	Breusch–Pagan Lagrange multiplier test	χ²(01) = 112.32^***
OLS vs REM	Null hypothesis: There is a systematic difference in coefficients (intercepts)	Breusch–Pagan Lagrange multiplier test	χ²(01) = 112.32^***
FEM vs REM	Difference in coefficients	Hausman test	χ²⁽⁹⁾ = 18.46^**
FEM vs REM	is not systematic	Hausman test	χ²⁽⁹⁾ = 18.46^**

Purpose	Null hypothesis	Test	t-statistics
OLS vs FEM	All ui = 0 (null hypothesis: There is no difference in intercepts of all the sample firms if considered individually)	Restricted F-test	F(71, 326) = 3.54^***
OLS vs REM	^σ2u = 0	Breusch–Pagan Lagrange multiplier test	χ²(01) = 112.32^***
OLS vs REM	Null hypothesis: There is a systematic difference in coefficients (intercepts)	Breusch–Pagan Lagrange multiplier test	χ²(01) = 112.32^***
FEM vs REM	Difference in coefficients	Hausman test	χ²⁽⁹⁾ = 18.46^**
FEM vs REM	is not systematic	Hausman test	χ²⁽⁹⁾ = 18.46^**

Note(s): “^***” significant at 1% level and “^**” at 5% level, respectively

Source(s): Calculated by researchers