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Demeaning independent variables

Discussion in 'Education' started by wesso, Oct 8, 2018.

  1. wesso

    wesso Guest

    I was reading a research paper in a reputable journal. They mention the following: The balance sheet ratios are demeaned within quarter and normalized within quarter by dividing them by one standard deviation.

    First of all, why would someone do that? Second, if i want to replicate the output this standard deviation is what? standard deviation of the ratio across all companies in the sample for that quarter ? (cross sectional). Or time series of the ratio?

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