Dear Sir/Madam,
I'm currently busy with my master dissertation on the performance of academic spin-offs. I have currently 179 companies in my dataset and I want to measure performance via ROE. However, 33 companies have negative equity which makes it impossible to calculate ROE. Just excluding them out of my dataset seems as a major mistake since those 33 companies aren't performing well. How should I solve this? Should I manually set the ROE of those 33 companies to a huge negative value (f.e. -200%) or how should I cope with this issue?
Thanks in advance!
You create them as secondary variables from the primary data. For example, if you have collected say net profit and total asset values for each year, you can create ROA by dividing net profits/total assets and so on.
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