+ Reply to Thread
Results 1 to 5 of 5

Thread: Multinomial regression: how to interpret results

  1. #1
    Points: 18, Level: 1
    Level completed: 35%, Points required for next Level: 32

    Posts
    2
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Multinomial regression: how to interpret results




    Hello Everyone,

    I'm currently writing my master's dissertation and i'm having two main issues.

    1) The first one is related to the attached picture: as you can see, both the variables "deal value" and "N employees" are signicative, but the B and the Exp(B) are zero. This way they are not included in the model, so I don't understand how they can be significative! Do you think there is an explanation to that?

    2) The second one is about the interpretation of the results when both the Y and the X variables are categorial.

    Y (financing for M&A) can be Debt or Shares, while X(sector) yes or no (yes= same sector for target and acquiror, no=different sectors).

    If the ODDS is 1,5, when the X is a value I say that the ODDS of paying with debt is 1,5 times the ODDS of paying with shares, for each one-unit increase in the variable X (also this case is not so clear to me, so I would be grateful if you could explain it better).

    But I really don't understand what to say when the X is categorial: I need to say which is the correlation between debt and sector=yes and between debt and sector=no, is it possible?

    I hope you can help me, since I really don't understand how to proceed. Thank you in advance.

    Best regards,

    Giulia Carbone
    Attached Images  

  2. #2
    Points: 6,387, Level: 52
    Level completed: 19%, Points required for next Level: 163
    Junes's Avatar
    Location
    Netherlands
    Posts
    246
    Thanks
    17
    Thanked 25 Times in 20 Posts

    Re: Multinomial regression: how to interpret results

    1) Presumably the b is smaller than 0.0005, but not equal to 0. Then it will be printed as .000. The reason being that the effect of employees is such that an extra employee doesn't affect the regression very much. To see it in your table, compute a transformed variable by dividing by a sensible number.

    2) for categorical variables it works the same with respect to a reference level (b is set to 0 for that level), so the odds with sector=0 is .489 of the odds with sector=1.

  3. #3
    Points: 18, Level: 1
    Level completed: 35%, Points required for next Level: 32

    Posts
    2
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Re: Multinomial regression: how to interpret results

    Thank you Junes, I finally could solve the first problem.

    Though, I still don't understand clearly the second point.. if I apply the odds to the x, what can I say about the y? Y=debt and Yreference=equity, so if the odds of x0 is 0.4 does it mean that the odds of paying by debt when x=0 is 0.4 than when x=1, so when x=o is less probable paying by debt and more with equity?

    Thanks again,

    Giulia

  4. #4
    Points: 6,387, Level: 52
    Level completed: 19%, Points required for next Level: 163
    Junes's Avatar
    Location
    Netherlands
    Posts
    246
    Thanks
    17
    Thanked 25 Times in 20 Posts

    Re: Multinomial regression: how to interpret results

    Glad to help. I think that's correct, if I understand you correctly. Let's take a concrete example again:

    Cross-border = 1 is the reference for X
    Equity is the reference for Y (it is the 0 outcome), so odds are expressed for debt (1) vs. equity (0). So an odds of 3 means debt is 3 times as likely as equity.

    The odds-ratio for cross-border=0 is 0.274. So odds(debt vs. equity|cross-border=0)/odds(debt vs. equity|cross-border=1)=0.274

    In order words, the odds for debt when cross-border is 0 is about a fourth of the odds for debt when cross-border=1 (keeping everything else constant).

    By the way, for binary variables, it's probably a good idea to use the levels coded with 0 as your reference. This is more common and more intuitive (0=factor is absent, 1=factor is present). You can recode if necessary.

    This may be a useful page, especially the part "Logistic regression with a single dichotomous predictor variables".
    Last edited by Junes; 10-31-2016 at 02:05 PM.

  5. #5
    TS Contributor
    Points: 40,621, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Awards:
    Downloads
    gianmarco's Avatar
    Location
    Italy
    Posts
    1,368
    Thanks
    232
    Thanked 301 Times in 225 Posts

    Re: Multinomial regression: how to interpret results


    As for Logistic Regression in general, I found Pampel's book on LR very useful, informative, and easy to follow. It has a nice section which provides a step-by-step guide to the interpretation of the results using a worked example. It also devoted some room to the interpretation of the fitted model results when some predictors are categorical.

    Best
    Gm
    http://cainarchaeology.weebly.com/

+ Reply to Thread

           




Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts






Advertise on Talk Stats