AFE6031-BAccountingandFinanceProject

Moduleoverview

Dr. Irfan Saleem SchoolofManagement

Overview

• Projectessay

• AccountingandFinanceProjectstructure

• Supervision

• DevelopingaProjecttopic

• Researchprocess

• Dataanalysis:presentation,techniquesandinterpretation

Projectv.essay

• Essaysareusedtoassesslearning

• Projectsareusedtoassess:

• deeperanalyticalskills

• researchmethodologies

• synthesisingconceptslearned

• drawingconclusionsbasedsolidevidence

Projectv.essay

• WritingaProjectshowsthatyouhaveachievedproblemsolvingskillsinyourchosenareaofstudy

• Youcanpresentareliablecasewhichis:

• evidencebasedusingappropriateliteratureanddata

• withanunbiasedconclusionsothegeneralpubliccanmakeanassessment of theproblem

Projectv.essay

• AppropriateProjectwritingskills:

• Agood/sensible/realistictopictoinvestigate

• Researchskillsfindingandusingcrediblesources

• Criticalthinkingskills

• Planningandorganisationalskillsaneffectivestructure

• Presentationalskillsclear,accurate,writingstyleusingaformaltone

AccountingandFinanceProjectstructure

• YourProjectshouldconsistofthefollowingchapters:

1. Introduction

2. TheoreticalandContextualLiteratureReview

3. Methodology

4. Dataanalysisandresults

5. Conclusion

Introduction

• Definethetopicthroughasummaryofthegeneralfocus/motivation of project that should demonstratea coherent finance or accounting based approach to the chosen topic

• Theresearchquestiontobeinvestigatedshouldalsobeclearly explained in this section

• Wordcountapproximately500words

TheoreticalandContextualLiteratureReview

• 10+ sources to support the specifictheoretical framework, identificationofassociatedstudiesandmethodologicalapproachtaken to answer your research question(s)

• Theseshouldbediscussedintermsofacriticalsummary/discussionofpreviousliterature

• Onlyuseacademicallycrediblestudiesg.journalarticles,research- led books, working papers, government/NGO reports etc.

• Wordcountapproximately1000words

• TargetdateFollowthemilestonesguidelines

Methodology

• Todevelopthemethod anddatatobeusedinyouranalysis:what methods are appropriate to answeringyour researchquestion(s)? Whatdata/variableswillyouuse?Whereisitfrom?Howwillyou analyse it?

• Inparticular,thisshouldincludethejustificationoftheempirical techniquesthat you intend to undertake through outlining their advantages / how they will resolve your research question(s)

• Wordcountapproximately500words

Dataanalysisandresults

• The specifics willdiffer for each of you in relation to the type of project youare undertaking and how confident youare on data analysis,but theemphasisistoshowtheanalyticalprocessthatyou decide to follow

• Thiscouldrangefromsimplebuildingblocksoftables/graphsand descriptive statistics through to measures of association through multiple regression

• PleasenotethatthisMUST bebasedonsecondarydataandNOT primary data given the time constraint and ethical issues

Dataanalysisandresults

• Graphicalrepresentationofdata:

• Linegraphstoshowtrends

• X-Ygraphstoshowrelationshipbetweenthetwovariables

• Disaggregatethedataintokeyperiodsandcompare/contrastacrossthese different time periods

• Descriptivestatistics:

• Producedescriptivestatistics(i.e.mean,minimum,maximumandstandard deviation)of variables across the whole sample or in the disaggregated periods for comparison if appropriate

Dataanalysisandresults

• Measuresofassociation:

• Correlationshowstheassociationbetweenapairofvariablesintermsof whether it is positive or negative on a scale from -1 to +1

• Simpleregressionagainshowstheassociationbetweenapairofvariables

• Multipleregressionshowstheassociationbetweenthedependentvariable and a range of independent variables

Dataanalysisandresults

• Toperformstatistical analysisyouwillneedtouseatleastSPSSeitherona UniversitycomputerunderIBMSPSSStatistics->IBMSPSSStatistics27or on install it on your own computer:https://unibradfordac.sharepoint.com/sites/it-services-intranet/Shared Documents/spss.pdf

OREVIEWSSOFTWARE.UniversityprovidesaccesstobothSPSSandEviews.

• Wordcountapproximately1500words

Conclusion

• Tosummariseyourkeyfindings,discussionofwaystoimproveyour research

• Wordcountapproximately500words

• ProjectdraftforfinalfeedbackFriday5^thApril2024

• ProjectsubmissionMondayby3pm29th April2024 (+2weekextension on extenuating circumstances )

Supervision

Supervision

• Fourhoursofmeetingsintotaloverthesemester

• Adviceon:

• developingtheProjecttopic

• devisingresearchquestions

• appropriateliterature

• developingamethodology

• datacollection&analysis

• feedbackondraftchapters&overallProject

Supervision

• Supervisorsworkindifferentwaysimportanttoclarifyworking practices & expectations at the start of the process

• AnyproblemswithsupervisioncontacttheModuleLeader(Saleem10@bradford.ac.uk)

• FinalcommentsonafulldraftoftheProjectifsubmittedaminimum of two weeks in advance of the submission deadline

Developing a Project topic

DevelopingaProjecttopic

• Waystodecideuponyourtopic:

• anaspectofaccountingorfinancethatinterestsyou

• somethingyouhaveread,seenonTVorheardonradio

• linkideatopotentialfuturecareer/furtherstudy

• ButitsyourProjecttopic!

DevelopingaProjecttopic

• Governanceroleofboardofdirectors

• Corporatesocialresponsibility

• Governanceand accountability with non-governmentalorganisations(NGOs)

• Corporate Governance (UK, International, or comparative, etc.,whetheritisaboutCGonitsown or linking it with firm performance, reporting, etc.)

• IFRSsofstudents' choice,suchasSegmentReporting (IFRS8 Operating Segments), Intangible Asset Reporting (IAS38 Intangible Assets)

• Voluntarydisclosure in the areas of g. CSR,environmentalreporting,sustainabilityreporting

• Earningsmanagement

• Financialstatement analysisandfirmvaluation

• Directorspayandperformance

• Directorspayandrisk

• Corporategovernanceandperformance

• Genderandpay

• Non-executivespay

• Sharepriceanomalies:whyaresharepriceshigher on certain days/weeks/months of the year?

• Anempirical investigation of the impact ofeconomicfundamentalsontherealexchangerate

• Determinantsofbankprofitability

• Determinants ofcapitalstructure

• Determinantsofannualreportsreadability

• Taxavoidance

• Taxaggressiveness

DevelopingaProjecttopic

Good

• Somethingthatisofinterestto you

• Anarrowlydefinedsingle research question

• Afeasibletopic:

• Basedonpreviousstudies

• Dataavailability

Bad

• Panic selection of a topicresultinginthischanging during the semester

• Broadand/ormultipleresearch questions

• Unfeasibletopic:

• Lackofpreviousstudies

• Littledataavailable

Research process

Researchprocess

• Thingstoconsiderwhenselectingyourtopic:

• Ensureitismanageablefocusyouridea

• Ensurethat:

  • Itispossibletomeasure /collect dataforthedependentvariable, otherwiseyoudont have a feasible topic

  • Youcan measure / collect data most of the independent variables indicated by theliterature

• Thatyouhaveareasonablesamplesize(i.e.atleast30observations)

Researchprocess

• ResearchQuestion

• Thebigquestion,butdontmakeittoobigensureitisasingledirect

question

• Sub-questionsand/orobjectives

• Relatethesetothedetailedaspectsofwhatyouwilltesttheindependent variables of your model

  • Hypotheses(toanswerthesub-questions)

• Aseriesofstatementsthatcanbemadeintoquestionswithtrue/falsetype answers to establish the truth

Researchprocess

• Theresearchquestionisthebigquestionorfocusquestionofyour researchoftenused to phrase the dissertation title as a question to cover the following ideas:

• WHATwhatarethedeterminantsof

• WHEREinwhichcountry,industry

• WHENthetimeperiodofthestudy

• This has the advantage that it is easy to assess whether you have done what you set out to do

Researchprocess

• Hypothesesareneedtoanswerthesub-questions:

• Thesesum-upwhatyouthinkintermsoftheresearchquestionandbasisof the question / sub-questions

• Theseshouldbestatementsthatcanbetestedeasily in terms of true/falsequestions

• Thereforehypothesesshouldbewordedsothatyoucantestthem:

  • Youshouldaskyourselfisthereawaytotestitintermsofastatisticaltest?

  • YoushouldaskyourselfcanIgetthedatatotestit?

Researchprocess

• Previousstudiesarethemostimportantaspecttoseehowothers approached the topic:

• Textbooksgainoverallidea/understandingofthetopicaccounting/ finance theory

• Research-ledbooks good sources for more focused discussion / summaryof theliterature

• Journalarticlesessentialtodiscovercurrentdebates/empiricalanalysis

Researchprocess

• Usethefollowingwebsitestolocateliterature:

• GoogleScholar(http://scholar.google.com/)

• UoBLibrary(http://bradford.summon.serialssolutions.com/)

• WebofKnowledge(http://wok.mimas.ac.uk/)

• BritishLibrary(http://www.bl.uk/)

• Sciencedirect

Researchprocess

• Youwillneedtoincludedataindifferentformsatdifferentpointsin your Project:

• TomotivateyourresearchIntroduction

• ToprovideacontextforyourdissertationIntroduction

• TotesthypothesesDataanalysisandresults

  • Think:whenandwhyyoumightneedtousesecondarydata

  • Think:whatmustIknowandexamineinordertoanalysemy question?

Researchprocess

• Dataconstruction:

• Transformationofdataoftennotintheformyouwillneedforanalysis:

  • nominaltoreal

  • valuetorateofchange

  • lineartologged

• Dataperiodtype:

• Cross-sectionaldatamanycompaniesforaparticularyear

• Time-seriesdataonecompanyovermanyyears

• Paneldatacombinationoftheabove

Researchprocess

• Regressionestimationtechniques:

• Thesewilloftenlookcomplexintheliterature,butfocusonwhatvariables are used / significant

• Anyregressionanalysisneedstobedonecorrectlyandfully:

  • Correctlyundertakingthemethodological,transformation,estimationandreporting processes properly

  • Fullydiscussing thebreakdownofassumptionsg.serialcorrelation/autocorrelation, heteroskedasticity, multicolinearity

• ButyouarenotexpectedtogobeyondwhatyoulearntinAFE6014-B Empirical Methods in Accounting and Finance

Data analysis: presentation, techniques and interpretation

Resultspresentation

• Dontcopy&pasteEviews/SPSSoutputwhenyoupresentyour regression resultscreate correct output tables in Word

Where: ***=1%,**=5%,*=10%

Absolutet-ratiosinbrackets

Graphicalrepresentationofdata

• Considerhowandwhentousegraphsinyourempiricalanalysis writing:

• Uselinegraphstoshowtrends

• UseX-Ygraphstoshowrelationshipbetweenthetwovariables

  • Disaggregatethedataintodifferentsamplesandcompare/contrast across these different samples

Descriptivestatistics

• Calculateacrossthewholesample

• orfordisaggregatedaspectsofthedatasetforcomparison:

• Mean

• Minimum

• Maximum

• Standarddeviation

  • Reportanyunusualpatternsand/orcheckforincorrectlyinputted data

Measuresofassociation

• Explorearangeofincreasinglysophisticatedmeasuresofassociation in your empirical analysis:

• Correlationshowstheassociationbetweenapairofvariables

• Simple regression again shows the association between a pair of variablesandtheimpactthatonevariablehasupontheotherandelasticity of the relationship

• Multiple regression shows the association between the dependent variable (i.e.theexchangerate)andarangeofindependentvariablesandtheimpact that one variable has upon the other and elasticity of the relationship

Discussionofregressionresults

• Reviewthethrees:

• Statisticalsignificance

• Sign

• Size(andelasticity)

• Statisticalsignificance:

• Reviewthestatisticalsignificanceoftheestimatedcoefficientst-test

• ReviewthestatisticalsignificanceoftheestimatedmodelF-test

Discussionofregressionresults

• Sign:

• Reviewthesignoftheestimatedcoefficientsinrelationto:

  • thatexpected/predictedbyeithereconomictheory

  • orthatfoundinpreviousempiricalstudies

• Ifyourestimatedcoefficientssignisdifferenttothatexpected/predicted

• youparticularlyneedtodiscusswhythismightbeso

Discussionofregressionresults

• Size:

• ReviewthepredictivesizeofthemodelR²andR²

• Thegoodnessoffit(R²)showshowwellyourmodelperforms

• butifyouchangethenumberofindependentvariablessuchthatyouwant to compare models

• youneedtousetheR²whichdeflatestheR²accordingtothenumber of independentvariables

Discussionofregressionresults

• Size:

• Reviewthesizeoftheestimatedcoefficient

• notethatyouneedtotakeintoaccounttheunitsofmeasurementofthe dependentandindependentvariable

• Reviewtheelasticityofeachindependentvariableatthesamplemeans

Discussionofregressionresults

• Fortheinterpretationoftheimpactofeachindependentvariable upon the dependent variable (i.e. the estimated coefficient)

• andthecalculationofelasticityforeachestimatedcoefficient

• notethatthisdependsonthefunctionalform(i.e.linear,log-linear, linear-log, double log) of your estimated regression equation

Discussionofregressionresults

• Toraisethelevelofyourempiricalanalysis

• aftercompletingthediscussionofyourregressionresults

• youshouldconsiderthepotentialbreakdownoftheassumptionsof OLS regression(i.e. whether the estimatorsare BLUE best, linear unbiased)

• Thiswilllargelydepend onyourdatatype timeseriesorcross sectional

Discussionofregressionresults

• Forallmodelsyouneedtocheckformulticolinearitybetweenthe independentvariablesthisistheundesirablesituationwhenone independent variable is a linear function of other independent variable(s)

• Thereareseveralwaysyoucantestforthis:

• Correlationofindependentvariables

• Collinearitydiagnosticstest

• Examinethevarianceinflationfactor(VIF)

Discussionofregressionresults

• Fortimeseriesmodelstheissueofserialcorrelation/autocorrelation will be a potential problem

• YoucantestwhenrunningregressionsbyselectingtheDurbin- Watson test

• Toremove serialcorrelation/autocorrelationfromyour model you have to use the SPSS syntax editor to access the AREGcommand or viewscommandsworkOrEVIEWSSOFTWAREWORKSBETTER

Discussionofregressionresults

• Forcross-sectionmodelstheissueofheteroskedasticitywillbea potential problem

• EviewsandSPSSdohaveanoptiontodetectthisandyoucouldalso plot the estimateddisturbance terms and review the pattern

• Theyshouldgivearandomdistributionandnotonewherethey appear aligned, see:

• http://www.youtube.com/watch?v=3QcX4jqPn14