DOCTOR OF BUSINESS ADMINISTRATION

BDMR8043

ADVANCE QUANTITATIVE ANALYSIS Dr Kamil Md Idris

Student Name: Cheah Teong Keat Matric No.: 93384

Q1. Perform a multiple regression analysis

Step 1: Request statistics for normality Step 2: indicate condition for exclusion of missing values Step 3: request statistics to evaluate normality

Standard multiple regression acceptable range for normality (-1.0 to +1.0). The skewness of the variables: attitude towards tax, law, enforcement, fairness, service quality, promotional campaign are all within the acceptable range for normality. The kurtosis for the variables: law, enforcement, fairness, service quality, promotional campaigns are all within the acceptable range for normality except attitude towards tax with the kurtosis (1.217) outside the range. Thus, we must proceed with caution. Step 4: Request scatterplot to evaluate linearity and homoscedasticity.

The scatterplot indicates that there is an inverse relation between independent variable law and dependent variable attitude towards tax. It also indicates that the variance for the dependent variable attitude towards tax is mainly uniform across the data values for the independent variable.

The scatterplot indicates that there is a inverse relation between independent variable enforcement and dependent variable attitude towards tax. It also indicates that the variance for the dependent variable attitude towards tax is mainly uniform across the data values for the independent variable.

The scatterplot indicates that there is almost a zero relation between independent variable fairness and dependent variable attitude towards tax. It also indicates that the variance for the dependent variable attitude towards tax is quite varied across the data values for the independent variable indicating heteroscedasticity.

The scatterplot indicates that there is a positive relation between independent variable service quality and dependent variable attitude towards tax. It also indicates that there is

differing variance for the dependent variable attitude towards tax by the independent variable indicating heteroscedasticity. The scatterplot indicates that there is a weak positive relation between independent variable promotional campaign and dependent variable attitude towards tax. It also indicates that the variance for the dependent variable attitude towards tax is mainly uniform across the data values for the independent variable

Step 5: Perform multiple regression

The results shows that the overall regression relationship is insignificant (.117) thus we are unable to reject the null hypothesis that there is no relationship between the set of independent variables and the dependent variable.

This is further strengthened by the R-square statistics (.079) which indicates a very weak relationship.

The direction of the relationship for law and attitude, enforcement and attitude is inverse whereas for fairness, service quality, and promotional campaign with attitude is direct. Nevertheless, the

independent variable law only shows significance thus rejecting the null hypothesis that the slope for law is equal to zero. This supports the above scatterplot which can be seen visibly. Thus, the b coefficient of -.808 states that for every one unit change in Law independent variable will have a corresponding change in dependent variable Attitude towards Tax. Thus, the conclusion is that there is not a model fit to the data.

Q2. Perform a Principal Components Factor Analysis

Five of the correlation in the matrix is larger than 0.30 thus meeting the criteria for suitability of the data for factor analysis.

The KMO Measure of Sampling Adequacy is 0.642 indicating a mediocre measure. The Barletts Test of Sphericity is significant thus rejecting the null hypothesis that the population matrix is an identity matrix which implies that all the variables are uncorrelated. There are correlations in the data set that are appropriate for factor analysis.

The anti-image correlation matrix measures are all in the acceptable level as they are above 0. 50. Thus there is not a need to remove any variable.

Using the latent root criterion, we identified that there are two component that have eigenvalues that are larger than 1.0. Thus, this criterion supports the presence of two components/factors. The combination of the two components has a cumulative percentage of variance explained of 62.62. Although the communalities percentage are preferred to be 70% and above, I believe this could be accepted. This can be seen by the scree test which indicates the eigenvalues tapering off at the beginning of the third eigenvalue with a levering to the right.

The table of Communalities show communalities for all variables above 5.0, thus no variables would be excluded.

Each variable has a substantial loading higher than 0.40 and they are each present in one factor only.

The two rotated factor matrices for each half produce different pattern of loadings for two variables Fairness and Promotional Campaign. One possibility is to

remove the variables or include this information in the discussion later of limitations to the study.

Since both models communalities are above 0.50 the factor model explains more than half the variance in all original variables.

Using a criterion of +-2.5, there is an outlier in the first and second factor respectively. Since there is no case id, we would not exclude the outliers from the factor analysis.

The results would produce regression factor 1 and factor 2 that would consists of the original variables. Multiple regression analysis will be performed on all the factors produce from the principal component analysis.

The results now show a significant (0.031) which allows us to reject the null hypothesis that there is no relationship between the sets of independent variables and the dependent variable. This could be a result of the two factors that take a cumulative 62.62% of the original variance from the initial five variables.

The PCA regression factor 1 is significant and we reject the null hypothesis that the slope associated with it is equal to zero. Whereas for the PCA regression factor 2, it is insignificant thus we cannot reject the null hypothesis.