C/C/19. MBA Quantitative Methods Assignment: Investigating the cross-sectional determinants of pay at Profserv

This report is an investigation of the cross-sectional determinants of pay based on a fictitious data set. It outlines the development of the regression model in a series of stages. The starting point is a discussion of how to formulate an initial specification. This is followed by an analysis of the estimated results. The report then deals with the testing of the OLS assumptions and, in particular, the homoskedasticity assumption. This leads on to the implementation of a correction procedure, and the estimation of a transformed model. Further hypothesis tests (t-tests and F-tests) on the corrected model are then used to validate a final specification. All calculations are illustrated in Excel.