Dear all,
My name is Mark and I am currently writing my thesis for a Master in Economics. I examine whether year to year changes in certain industry variables have an effect on the likelihood of CFO termination (0/1 variable). I have six X-variables, that are calculated as the absolute pro rata change between an industry year average (of a given variable) and the previous year average (t1-t0/t0). So, the x variable is continuous and the same for all firms in the given industry in the given year.
I made a Spearman and Pearson correlation matrix and what I found was that some of these variables have very large differences (between Spearman and Pearson). The big differences are all connected to one variable named advertising. The correlations between this variable and four other variables all have big differences in Spearman vs Pearson. [ see attachment]
Also, I winsorized all my data at the 99th and 1st percentile, so I already took care of outliers.
Could somebody provide some explanation on why these correlations defer (Pearson vs Spearman). Also, does this indicate that there is something wrong with my data? Do I have to modify the data or can I just conclude things?
So, what is the normal set of actions to take when you run in to this situation?
Thank you in advance,
Kind regards,
Mark
My name is Mark and I am currently writing my thesis for a Master in Economics. I examine whether year to year changes in certain industry variables have an effect on the likelihood of CFO termination (0/1 variable). I have six X-variables, that are calculated as the absolute pro rata change between an industry year average (of a given variable) and the previous year average (t1-t0/t0). So, the x variable is continuous and the same for all firms in the given industry in the given year.
I made a Spearman and Pearson correlation matrix and what I found was that some of these variables have very large differences (between Spearman and Pearson). The big differences are all connected to one variable named advertising. The correlations between this variable and four other variables all have big differences in Spearman vs Pearson. [ see attachment]
Also, I winsorized all my data at the 99th and 1st percentile, so I already took care of outliers.
Could somebody provide some explanation on why these correlations defer (Pearson vs Spearman). Also, does this indicate that there is something wrong with my data? Do I have to modify the data or can I just conclude things?
So, what is the normal set of actions to take when you run in to this situation?
Thank you in advance,
Kind regards,
Mark