Accounting And Finance Dissertation Methodology Sample 8

Data collected from the annual financial reports will be analyzed using the ordinary least squares (OLS) regression model. The formula for the model is depicted below: 

𝐷𝐷𝐷𝑖,𝑡 = 𝛼0𝑖𝑡° + 𝛽1𝐶𝐷𝐶𝑖𝑡 + 𝛽2𝐷𝐷𝑆𝐸𝑖𝑡 + 𝛽3𝐿𝐸𝐿𝑖𝑡 + 𝛽4𝐶𝐶𝐷𝐶𝑖𝑡 + 𝛽5𝐶𝑅𝐶𝑖𝑡 + 𝛽6𝑘𝑖𝑡 + 𝛽7𝐿𝑅𝐷𝐷𝑖𝑡 + 𝛽8𝐷𝐼𝐷𝑖𝑡 + 𝜖𝑖𝑡

The above equation represents the model of regression in which the “DIS” represents the financial distress if the firm whereas “i” is the firms whereas “t” represents the financial years 2006 – 2016 that had been measured through applying Altman’s Z-score. The other variables that are highlighted in the equation are CSR which represents corporate social responsibility; Size shows the natural logarithm of total assets, LEV is measured through ratio analysis in which the short-term and long-term debt divided by total assets. The variable CASH indicates the cash holdings by the firm defined as cash and marketable securities scaled by total assets, ROA represents the return on assets which is a determined through ratio analysis, K variable represents cash plus receivables/current liabilities, LOSS indicates Dummy variable scored as 1 if the firm is a loss-making firm in a given year, IND factor shows the industry sector dummy variable, coded 1 if the firm is represented in the particular GICS category, otherwise 0 and lastly, YEAR shows the year dummy variable, coded 1 for a particular year, otherwise 0 and e = the error term. i = firms 1–150. t = financial years 2006–2016.

DIS = financial distress (Altman’s Z-score) 

CSR = either POS_CSR or NEG_CSR

SIZE = the natural logarithm of total assets 

LEV = short-term and long-term debt divided by total assets

CASH = cash holdings by the firm defined as cash and marketable securities scaled by total assets 

ROA = return on assets

K = cash plus receivables/current liabilities

LOSS = Dummy variable scored as 1 if the firm is a loss-making firm in a given year

IND = industry sector dummy variable, coded 1 if the firm is represented in the particular GICS category, otherwise 0

YEAR = year dummy variable, coded 1 for a particular year, otherwise 0 and e = the error term. 

The extended OLS regression model utilized to examine the relationship between financial distress, CSR performance and firm life cycle stages are:

𝐷𝐷𝐷𝑖,𝑡 = 𝛼0𝑖𝑡° + 𝛽1𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑖𝑡 + 𝛽2𝐷𝐷𝑆𝐸𝑖𝑡 + 𝛽3𝑑𝑑𝑖𝑡 + 𝛽4𝑙3𝑖𝑡 + 𝛽5𝐶𝑅𝐶𝑖𝑡 + 𝛽6𝐼𝑁𝐶𝑖𝑡 +

𝛽₇𝑙𝑐𝑐𝑐𝑐 + 𝜖_𝑖𝑡                                                               (3.1)

where i = firms 1–150; t = financial years 2006–2016; DIS = financial distress (Altman Z); logofcsr = either POS_CSR or NEG_CSR; size = the natural logarithm of total assets; LEV = financial leverage short-term and long-term debt divided by total assets; dv = cash holdings by the firm defined as cash and marketable securities scaled by total assets;             ROA = return on assets; NWC = net working capital; CAPEX = Proportion of fixed assets in total assets – Control Variable.

Our extended OLS regression model used to investigate the association between financial distress, CSR performance and firm life cycle stages is estimated as follows:

𝐷𝐷𝐷_𝑖,𝑡 = 𝛼_0𝑖𝑡° + 𝛽₁𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙_𝑖𝑡 + 𝛽₂𝐿𝐿𝑙𝑐 𝐶𝐶𝑙𝑙𝑐_𝑖𝑡 + 𝛽₃𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙_𝑖𝑡 ∗𝐿𝐿𝑙𝑐 𝐶𝐶𝑙𝑙𝑐 + 𝛽₄𝐷𝐷𝑆𝐸_𝑖𝑡

+ 𝛽₅𝑙3_𝑖𝑡 +  𝛽₆𝑑𝑑_𝑖𝑡 + 𝛽₇𝐶𝑅𝐶_𝑖𝑡                                     

+ 𝛽8𝐶𝑅𝐶𝑖𝑡 + 𝛽9 𝐼𝑁𝐶𝑖𝑡 + 𝛽9 𝑙𝑐𝑐𝑐𝑐𝑖𝑡

+ 𝜖_𝑖𝑡                                                                    (3.2)

Where Life Cycle = Dickinson life cycle model measured as retained earnings scaled over CSR * Life Cycle = an interaction term comprising the life cycle variable multiplied by CSR.