Statistics for Business and Economics (13th Edition)

13th Edition

ISBN: 9780134506593

Author: James T. McClave, P. George Benson, Terry Sincich

Publisher: PEARSON

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Textbook Question

Chapter 12.5, Problem 12.44ACI

Factors that impact an auditor’s judgment. A study was conducted to determine the effects of linguistic delivery style and client credibility on auditors’ judgments (Advances in Accounting and Behavioral Research, 2004). Two hundred auditors from Big 5 accounting firms were each asked to perform an analytical review of a fictitious client’s financial statement. The researchers gave the auditors different information on the client’s credibility and linguistic delivery style of the client’s explanation. Each auditor then provided an assessment of the likelihood that the client-provided explanation accounted for the fluctuation in the financial statement. The three variables of interest—credibility (x₁), linguistic delivery style (x₂), and likelihood (y)-were all measured on a numerical scale. Regression analysis was used to fit the interaction model, y = β₀ + β₁x₁ + β₂x₂ + β₃x₁x₂ + ε. The results are summarized in the table at the bottom of page.

a. Interpret the phrase client credibility and linguistic delivery style interact in the words of the problem.
b. Give the null and alternative hypotheses for testing the overall adequacy of the model.
c. Conduct the test. part b, using the information in the table.
d. Give the null and alternative hypotheses for testing whether client credibility and linguistic delivery style interact.
e. Conduct the test, part d, using the information in the table.
f. The researchers estimated the slope of the likelihood-linguistic delivery style line at a low level of client credibility (x₁ = 22) . Obtain this estimate and interpret it in the words of the problem.
g. The researchers also estimated the slope of the likelihood–linguistic delivery style line at a high level of client credibility (x₁ = 46). Obtain this estimate and interpret it in the words of the problem.

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Chapter 12.5, Problem 12.43ACI

Chapter 12.5, Problem 12.45ACI

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Chapter 12 Solutions

Statistics for Business and Economics (13th Edition)

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Solution Summary: The author explains that the data in the table represents the results of multiple linear regression with interaction effect.

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