st: regress with dummys | Difference in Difference estimator

[Julian Kochan <julian.kochan@gmx.de>]

Hi,

i have a set of data with financial firm characteristics of about 10.000 firms for Year 2000 - Year 2012.

My goal is to use a difference in difference estimator and to do a regression with the dependent variable: corporate_investments and independent variables: dummy pre_post and a dummy for treatment and control.
I want to see, how investments changed from 2007 to 2008 for the treated / control firms. 

I generated a treatment dummy, labeling a firm as treated when Short Term Debt / Total LTDebt > 20 %. All others belong to the control group, such that treatment is equal to 1 and control is equal to 0.
I did the same for the pre_post dummy. I am not sure about this one. Should I generate dummys for each year from 2000 till 2012. Or, as I did now, generate a dummy, which labels = 0 if year == 2007 and labels = 1 if year == 2008.

However, trying to regress with regress corporate_investments treatment pre_post leads to an awkward output with R^2 = 0,003 ( something here is definitely wrong with my model, my dummys or ... )

Can someone help me with the difference in difference approach ? 
Did I generate wrong dummys ? 

Thanks

Julian 

		
*
*   For searches and help try:
*   http://www.stata.com/help.cgi?search
*   http://www.stata.com/support/faqs/resources/statalist-faq/
*   http://www.ats.ucla.edu/stat/stata/