Chapter 4, Problem 14P

A study investigated the relationship between audit 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. Some of the independent variables that were included in this study follow:

A sample of 40 companies provided the following data:

1. a. Develop the estimated regression equation using all of the independent variables included in the data.
2. b. Test for an overall regression relationship at the 0.05 level of significance. Is there a significant regression relationship?
3. c. How much of the variation in the sample values of delay does this estimated regression equation explain? What other independent variables could you include in this regression model to improve the fit?
4. d. Test the relationship between each independent variable and the dependent variable at the 0.05 level of significance, and interpret the relationship between each of the independent variables and the dependent variable.
5. e. On the basis of your observations about the relationships between the dependent variable Delay and the independent variables Quality and Finished, suggest an alternative regression equation to the model developed in part a to explain as much of the variability in Delay as possible.