SEEU Review vol. 5 Nr. 2 (pdf) - South East European University

SEEU Review Volume 5, No. 2, 2009
Table 6: Results of regression analysis-Slovenian listed companies
Coef. Std. Err. t P>|t|
Tang .3533347 .1002947 3.52 0.001
Profit -2.896902 .4620824 -6.27 0.000
Size .1794011 .0323512 5.55 0.000
Nondebttax -2.829334 .9844137 -2.87 0.006
Growth .0000808 .0001015 0.80 0.430
_cons -1.325376 .3310509 -4.00 0.000
R-square (coefficient determination) measures the proportion of the
variance jointly explained be the explanatory variables, and generally
increases, if we add another variable to a regression equation. Adjusted R-
square attempts to compensate for this automatic upward shift by imposing a
penalty for increasing the number of explanatory variables.
The maximum value of R-square is 1. This occurs when the regression
line fits the observations exactly. The closer the R-square is to 1, the “better”
the overall fit of the estimated regression equation to the actual data.
With time series data, R-squared are often in excess of .9; with the crosssectional
data, .5 might be considered a reasonable good fit (Baye, 2005). In
our case, R-square explains that 37.65 percent of the variation in leverage
can be captured by independent variables for Macedonian listed companies,
respectively 68.94 percent for Slovenian listed companies. The rest of
leverage’s variance is due to factors other than determinants studied in this
article.
F-statistic provides a measure of the total variation explained by the
regression relative to the total unexplained variation. The greater the F-
statistic, the better the overall fit of the regression line through the actual
data. Regression that have F-statistics with significance values of 5 percent
or less are generally considered significant. In our case, F-statistic shows that
overall models are significant.
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