st: regress with dummys | difference in difference estimator

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

Hi,

this is an update to my previous question: 

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.  generate post_2007 = (Year >= 2007)

Then I generated a interaction term: gen interaction = post_2007*treatment_

Finally I regressed: reg corporate_investments post_2007 treatment_ interaction 

This lead to an output of R^2 = 0.003 which is pretty bad. What could be the reason ? 
Can someone help me with the difference in difference approach ? 
Did I generate wrong dummys ? 

Thanks

Julian 
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