Fixed effects with moderating dummy variables?

12 January 2022 0 3K Report

I am currently researching the effect of Earnings Management on Leverage and I have two moderating variables in this relationship: 1) a MNC dummy; 2) a legal origin dummy.

Currently I run my analysis with Industry- and Year FE. Would it make sense to run the regressions with Industry-, Year, and Country FE? The moderating dummy variables do not substantially vary over time.

My question would be: Does it make sense to include Country FE, when moderating dummy variables do not vary over time?

Curious to hear your thoughts and thanks in advance!!

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