Question

A study investigated the relationship between audit delay (Delay), the length of time from a company's fiscal year-end to the date of the auditor's report, and variables that describe the client and the auditor. The independent variables are as follows.

Industry- A dummy variable coded 1 if the firm was an industrial company or 0 if the firm was a bank, savings and loan, or insurance company.

Public-A dummy variable coded 1 if the company was traded on an organized exchange or over the counter; otherwise coded 0.

Quality-A measure of overall quality of internal controls, as judged by the auditor, on a five-point scale ranging from "virtually none" (1) to "excellent" (5).

Finished -A measure ranging from 1 to 4, as judged by the auditor, where 1 indicates "all work performed subsequent to year-end" and 4 indicates "most work performed prior to year-end.

" A sample of 40 companies provided the following data.

Delay	Industry	Public	Quality	Finished
62	0	0	3	1
45	0	1	3	3
54	0	0	2	2
71	0	1	1	2
91	0	0	1	1
62	0	0	4	4
61	0	0	3	2
69	0	1	5	2
80	0	0	1	1
52	0	0	5	3
47	0	0	3	2
65	0	1	2	3
60	0	0	1	3
81	1	0	1	2
73	1	0	2	2
89	1	0	2	1
71	1	0	5	4
76	1	0	2	2
68	1	0	1	2
68	1	0	5	2
86	1	0	2	2
76	1	1	3	1
67	1	0	2	3
57	1	0	4	2
55	1	1	3	2
54	1	0	5	2
69	1	0	3	3
82	1	0	5	1
94	1	0	1	1
74	1	1	5	2
75	1	1	4	3
69	1	0	2	2
71	1	0	4	4
79	1	0	5	2
80	1	0	1	4
91	1	0	4	1
92	1	0	1	4
46	1	1	4	3
72	1	0	5	2
85	1	0	5	1

Enter negative values as negative, if necessary.

1. Develop an estimated regression equation that can be used to predict Delay by using Industry and Quality (to 2 decimals, if necessary).
   
   Delay = ( ) + ( ) Industry +( ) Quality
2. At the .05 level of significance, test for any positive autocorrelation in the data.
   d _L =  
   d _U =  

Answer 1

Using Minitab

Stat -> regression Model

Regression Equation

Delay = 70.63 + 12.74 Industry - 2.92 Quality

b)

Durbin-Watson Statistic = 1.42611

for k = 2

n = 40

dL = 1.391

dU = 1.600