FINANCE Corporate financial policy and R and D Management

(5.66)

(5.66)

where,

Qi= R–1X′Zi Σ

^–1

= (σ^ij) Zi= Yi,Xi i= 1, 2,...,m (5.67)

In Chapters 6 and 7, we develop OLS, 2SLS, and 3SLS estimates of divi-
dend, capital expenditures, new debt, and R&D equations.

ˆ

ˆˆ ˆ

ˆˆ ˆ

ˆˆ ˆ

ˆ (

δ

σσ σ

σσ σ

σσ σ

σ

=

′′⋅ ′

′′⋅ ′

⋅⋅⋅⋅

′′⋅ ′

 ′′



























−

=

11

11

12

12

1

1

21

21

22

22

2

2

1

1

2

2

1

1

1

QQ QQ QQ 1

QQ QQ QQ

QQ QQ QQ

m ZXX

m

m

m

m

m

m

mm

mm

j

Σmj XXXy

Z XXX Xy

Z XXX Xy

j

j

mj

j

j

mmj

mj

)

ˆ ()

ˆ ()

−

⋅

=

−

⋅

=

−

⋅

′

′′ ′

⋅⋅⋅⋅⋅⋅⋅⋅⋅⋅

′′ ′





























1

1

2

2

1

1

1

Σ

Σ

σ

σ

92 AN INTRODUCTION TO STATISTICAL ANALYSIS AND SIMULTANEOUS EQUATIONS