(b) Client Positions | | Large Firms | Small Firms | Total | |-----------|-------------|-------------|-------| | In Favor | 19 | 113 | 132 | | Opposed | 13 | 32 | 45 | | Total | 32 | 145 | 177 | picture Click here for the Excel Data File (a) Test to determine whether auditor positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use $\alpha$ = .05. (Round your expected frequencies to 2 decimal places. Round your answer to 3 decimal places.) $\chi^2$ = 4.096; so Reject H0. independence for auditor positions regarding earnings-increasing changes. (b) Test to determine whether client positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use $\alpha$ = .05. (Round your answer to 3 decimal places.) $\chi^2$ = ; so Reject H0. independence for client positions regarding earnings-increasing changes.
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In a 1993 article in Accounting and Business Research, Meier, Alam, and Pearson studied auditor lobbying on several proposed U.S. accounting standards that affect banks and savings and loan associations. As part of this study, the authors investigated auditors' positions regarding proposed changes in accounting standards that would increase client firms' reported earnings. It was hypothesized that auditors would favor such proposed changes because their clients' managers would receive higher compensation (salary, bonuses, and so on) when client earnings were reported to be higher. The table below summarizes auditor and client positions (in favor or opposed) regarding proposed changes in accounting standards that would increase client firms' reported earnings. Here, the auditor and client positions are cross-classified versus the size of the client firm. (a) Auditor Positions Large Firms Small Firms Total In Favor 14 129 143 Opposed 12 22 34 Total 26 151 177 (b) Client Positions Large Firms Small Firms Total In Favor 23 109 132 Opposed 21 24 45 Total 44 133 177 (a) Test to determine whether auditor positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use α = .05. (Round your expected frequencies to 2 decimal places. Round your answer to 3 decimal places.) (b) Test to determine whether client positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use α = .05. (Round your answer to 3 decimal places.)
Rachel G.
The Federal Reserve Board of Governors recently changed the reporting of its stance on monetary policy from what they termed a "policy bias" to a "balance of risks". A researcher wished to see whether there had been a change in the way financial analysts were interpreting the change in reporting. When the "policy bias" reporting method was used, it was known that only 35% of the Board's decisions were correctly anticipated by analysts in their reports. For the "balance of risks" method, the researcher took a random sample of 50 analysts' reports and found that 24 of these correctly anticipated the Board's decision. Assume that the test is to be carried out at the 5% level. 1. State the direction of the alternative hypothesis used to test whether the proportion of analysts correctly anticipating the Board's decision had changed. Type gt (greater than), ge (greater than or equal to), It (less than), le (less than or equal to) or ne (not equal to) as appropriate in the box. 2. Calculate the test statistic, reporting your answer to two decimal places. 3. Use the tables in the textbook to determine the p-value for the test, giving your answer to four decimal places. 4. Is the null hypothesis rejected for this test? Type yes or no. 5. Disregarding your answer for 4, if the null hypothesis was rejected at the 5% level, would the predictive accuracy of the claims in analysts' reports appear to have changed under the new system? Type yes or no.
Sri K.
The table to the right contains observed values and expected values (in parentheses) for two categorical variables, X and Y, where variable X has three categories and variable Y has two categories. Use the table to complete parts (a) and (b) below. Upper X 1 Upper X 2 Upper X 3 Upper Y 1 33 (34.59) 42 (43.96) 54 (50.45) Upper Y 2 15 (13.41) 19 (17.04) 16 (19.55) (a) Compute the value of the chi-square test statistic. chi^2 = [to be calculated] (Round to three decimal places as needed.) (b) Test the hypothesis that X and Y are independent at the alpha = 0.1 level of significance. A. H0: The Y category and X category are independent. H1: The Y category and X category are dependent. B. H0: The Y category and X category are dependent. H1: The Y category and X category are independent. C. H0: µx = Ex and µy = Ey H1: µx ≠Ex or µy ≠Ey D. H0: The Y category and X category have equal proportions. H1: The proportions are not equal. What range of P-values does the test statistic correspond to? The P-value is greater than 0.10, between 0.01 and 0.025, between 0.05 and 0.10, between 0.025 and 0.05, or less than 0.01. Should the null hypothesis be rejected? A. No, do not reject H0. There is sufficient evidence at the alpha = 0.1 level of significance to conclude that X and Y are dependent because the P-value is less than alpha. B. Yes, reject H0. There is not sufficient evidence at the alpha = 0.1 level of significance to conclude that X and Y are dependent because the P-value is less than alpha. C. Yes, reject H0. There is not sufficient evidence at the alpha = 0.1 level of significance to conclude that X and Y are dependent because the P-value is greater than alpha. D. No, do not reject H0. There is not sufficient evidence at the alpha = 0.1 level of significance to conclude that X and Y are dependent because the P-value is greater than alpha.
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