STX2500 Coursework

Introduction

The coursework for this module is in two parts, both based on the same set of data. The first part will be due in half way through the semester. You will be given feedback on this before having to submit the second part, which will be due in at the end of the semester. Both parts involve the analysis of the same set of data.

The data

The data is taken from the thesis of a student who obtained his PhD at Middlesex University in September 2001. The data concern a sample of 74 companies in a European country, for the year 1996. One aim of the thesis was to investigate how corporate financial disclosure practices depended on various company characteristics. Your coursework is to carry out analyses of the kind that help achieve this aim.

The data set is in Minitab format in the coursework area of the module OASIS site. This worksheet contains the following variables:

Information on the Worksheet

Column Count Name

C1 74 ACTUAL

C2 74 MAX

C3 74 INDEX

C4 74 SALES

C5 74 ASSETS

C6 74 CAPITALI

C7 74 AGE

C8 74 PRMARG

C9 74 ROCE

C10 74 CURRENT

C11 74 TYPE

C12 74 LISTING

C13 74 AUDIT

The meaning of each variable is as follows:

1. ACTUAL. The number of financial items disclosed in the company’s Corporate Annual Financial Statement. This statement normally includes a balance sheet, an income statement, a statement of changes in financial position, and other explanatory notes and statements. A number of detailed items are required to be disclosed, by law or to meet the requirements of the accounting authorities.
2. MAX. The maximum number of items required that are applicable to the company.
3. INDEX. This is the main variable of interest. It is equal to the percentage of applicable items that are disclosed:
   \[\text{INDEX}\quad =\quad \frac{\text{ACTUAL}}{\text{MAX}}\quad \times \,\,100\ %\] .
4. SALES. Net sales of the company (in millions of the country’s unit of currency).
5. ASSETS. Total assets of the company (in millions of the country’s unit of currency).
6. CAPITALI. Market capitilisation
   (SALES , ASSETS and CAPITALI are measures of company size.)
7. AGE. Age of the company, in years.
8. PRMARG. Profit margin, the ratio of the company’s profit to its sales.
9. ROCE. Return on capital employed, the ratio of the company’s profit to its capital employed.
   (Both PRMARG and ROCE are measures of company profitability.)
10. CURRENT. The current ratio (a measure of the company’s short-term liquidity).
11. TYPE. The type of company – conglomerates (1), manufacturing (2), other (3).
12. LISTING. Listing status – listed on the country’s main market stock exchange (1) or not (0).
13. AUDIT. Auditor type – accounts audited by a large accounting firms (1) or not (0).
    Aims of the coursework
    Your overall aim is to investigate how the INDEX depends on the corporate characteristics. (You do not need to consider the two variables from which the index was constructed.) You will do this in two stages – Coursework 1 (to be handed in half way through the semester), and Coursework 2 (to be handed in towards the end of the semester).
    The first piece of coursework is based on methods you have learned about in Weeks 1 to 3.
    Aims
    Your objectives are to investigate how company financial disclosure (INDEX) depends on each of the categorical variables listing status (LISTING) and auditor-type (AUDIT). In each case, this will involve comparing two sub-samples of companies. You should aim to answer questions like the following:
14. Is there any evidence that listed companies disclose more (or less) than unlisted ones?
15. How does the size of the auditing firm affect disclosure?
    Method
    You will need to carry out an exploratory analysis of the INDEX variable, to investigate its distribution, and to see how it appears to depend on the other three variables. You should then apply appropriate statistical techniques (tests and confidence intervals), check the validity of the methods you use, and modify your analysis if appropriate. Finally, you should draw conclusions from your analysis, answering the questions listed above.
    Presentation
    You should present your results in the form of a short report. This should consist of:
16. A brief introduction explaining the background to, and objectives of, your analysis;
17. an exploratory analysis of the data – summary statistics, plots, etc;
18. a brief explanation why you chose particular techniques to analyse the data;
19. the results of your analysis, with checks on the validity of the methods you used;
20. conclusion – a discussion and interpretation of your results, and a summary of what you have achieved.

You should include relevant parts of the Minitab output (tables and graphs) in your report. You should not include any other Minitab output. Your report should be kept short: 6 pages, including all the graphs, should be the maximum.

Price: $11.26

Solution: The downloadable solution consists of 7 pages, 426 words and 3 charts.
Deliverable: Word Document