Case 6

Question 1

Which of the following proposals would lead to a valid partial F-test?
a) The “Complete model” is the basic Model (1); the “Reduced model” is Model (1) without the two dummies sstart and complete.

b) The “Complete model” is Model (1) with the interaction term start*complete added; the “Reduced model” is the basic Model (1).

c) The “Complete model” is the basic Model (1); the “Reduced model” is Model (1) where the two dummies start and complete are replaced by the single explanatory variable start + complete.

d) The “Complete model” is the basic Model (1); the “Reduced model” is Model (1) where the two dummies start and complete are replaced by the single explanatory variable start – complete.

Answer 1

d)

Question 2

Which of the following statements concerning the implications of a1 being 0.981 is correct?
a) For given values of the other explanatory variables, larger firms tend to have a higher Tobin’sq than smaller firms.

b) For given values of the other explanatory variables, larger firms tend to have a lower Tobin’sq than smaller firms.

c) For given values of the other explanatory variables, firm size does not affect Tobin’sq.

d) There is insufficient information to make a motivated choice between the options a), b) and

Answer 2

b)

Question 3

I) Only when H0 holds can the effects of the start- and complete coefficients be interpreted in terms of a firm’s Tobin’sq rather than in terms of its market value.

II) When H0 holds, Tobin’s q will not be influenced by a firm’s-book value

Answer 3

1) incorrect
2) correct

Question 4

For which of the preceding Cases 2) and 4) is serial correlation (or autocorrelation) a possible source of concern?
a) For both Cases 2) and 4).
b) For Case 2), but not for Case 4).
c) For Case 4), but not for Case 2).
d) For neither Case 2) nor Case 4

Answer 4

c)

Question 5

Which of the following claims concerning the effect of this “serious issue” on the author’s estimation results in Table 3 is correct?

a) The authors will tend to overestimate the effect of ERP adoption: and the more “other adopters” there are, the stronger this overestimation will be.

b) The authors will tend to overestimate the effect of ERP adoption: and the fewer “other adopters” there are, the stronger this overestimation will be.

c) The authors will tend to underestimate the effect of ERP adoption: and the more “other adopters” there are, the stronger this underestimation will be.

d) The authors will tend to underestimate the effect of ERP adoption: and the fewer “other adopters” there are, the stronger this underestimation will be.

Answer 5

c)