I am looking at factors affecting firm value (the dependent variable). I fitted the following model using OLS:
$log(FirmValue_i)=\beta_0 + \beta_1Divers_i+ \beta_2HQLoc_i + \epsilon_i$
where $Divers$ is the diversification discount and $HQLoc$ is the location of corporate headquarter. I also controlled for R&D expenditure, a proxy measure of information asymmetry, in my model. When I exclude R&D, the coefficient for diversification discount is 7.5% and the coefficient for NYC is 5%. When I include R&D the coefficient on diversification discount drops to 2% and the coefficient of NYC drops to 1%.
I know this means that it is actually R&D that affects firm value rather than diversification but is it correct for me to say, "R&D as proxy for information asymmetry clearly has an important effect on the dependent variable excess value. However, in the models in which we don’t control for R&D and thus for information asymmetry, the effect of location is more pronounced. This confirms the hypothesis that when there is higher information asymmetry, such as in diversified firms with complex structures, the location is more important?"