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Re: st: Transformation of variable with pos/neg values via asinh
From
Steven Delbright <[email protected]>
To
Statalist <[email protected]>
Subject
Re: st: Transformation of variable with pos/neg values via asinh
Date
Mon, 18 Nov 2013 20:00:07 -0600
Dear David:
Thanks for your response:
The source for negative CEO wealth are decreases in stock price. I
find that the changes in CEO wealth (stock and option portfolio)
outweigh annual flow compensation considerably. You are also
absolutely correct in stating that I take a difference between two
positive values (equity portfolio at the end minus the beginning of
the year).
I was curious about how you would transform the input variables
without creating a negative value?
Thanks again!
Steve
On Mon, Nov 18, 2013 at 7:43 PM, David Hoaglin <[email protected]> wrote:
> Dear Steven,
>
> The presence of extreme values (relative to the variation in the bulk
> of the data) suggests that the variable does not have a normal
> distribution. Do you have a mixture of some sort?
>
> What is the source of the negative values of CEO wealth?
>
> A variable that has both positive and negative values is often the
> result of taking the difference between two positive quantities. If
> some sort of transformation seems likely to be useful, it is usually a
> good idea to transform the variables that are the basis for the
> difference.
>
> Regards,
>
> David Hoaglin
>
> On Mon, Nov 18, 2013 at 6:21 PM, Steven Delbright
> <[email protected]> wrote:
>> Dear Austin:
>>
>> Thanks so much for the quick response! I indeed struggle with a
>> "wealth" dependent variable (CEO wealth to be exact). Do you have some
>> sample citations for academic work transforming wealth variables (not
>> necessarily in management but also other fields).
>>
>> Also, I found your comment regarding using a different link. I never
>> considered this option before but always transformed my DV. What link
>> would I use for untransformed wealth variables with fat tails?
>>
>> Thanks much!
>> Steven
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