Assignment Task
Objective
The objective of this assignment is to utilize various analysis techniques to predict audit fees based on various financial and non-financial factors such as market capitalization, industry, auditor, balance sheet assets, beta, and sales.
Data Exploration
- Provide a summary of the dataset, including descriptive statistics, missing values, and outliers.
- Visualize the relationships between audit fees and each predictor variable using scatter plots.
Correlation Analysis
- Calculate and interpret the correlation matrix between audit fees and predictor variables.
- Identify the variables with the highest and lowest correlations with audit fees.
Regression Analysis
- Perform a multiple linear regression analysis with audit fees as the dependent variable and all predictor variables as independent variables.
- Evaluate the overall fit of the regression model using appropriate statistics (R-squared, F-statistic).
- Interpret the regression model coefficients, paying particular attention to the significance levels.
Factor Analysis
- Conduct a factor analysis to identify latent factors that explain the shared variance among the predictor variables.
- Examine the factor loadings and determine the interpretation of each factor.
- Assess whether the identified factors provide insights into the underlying structure of the data and the potential for dimensionality reduction.
- Compare the predicted and actual audit fees to assess the model’s accuracy.
Other Analysis
- Robust
- Sensitivity
Discussion and Conclusion
- Summarize the key findings from the regression, correlation, and factor analyses.
- Discuss the variables that significantly influence audit fees and their respective magnitudes.
- Reflect on the limitations of the analysis and potential areas for further research.