QM3 Case 6

a)
i) Number of firms observed during the time period, typical example of
panel data.
ii) 24 037/13, 4069/13 actually adopted the ERP system.
iii) Panel data.
b)
i) H1:
i) HA: H1> 0
ii) H2a:
i) HA: H2a < 0
iii) H2b:
i) HA: H2b < 0
iv) H3a:
i) HA: H3a > 0
v) H3b
i) HA: H3b > 0
c)
i) Financial performance ration: For the nominator look at the adopter’s
variable in table 3, continue in a horizontal line to the right and then look
at the number that is not in parentheses, which gives the p-value. Next to
the p-value there is one, two, or three stars, which indicates the
significance level that is used. For the denominator follow the vertical
line on the left side of the table.
Productivity: Same logic and same method in table 4.
Tobin’s q analysis: Same logic and same method in table 4.
ii)

iii) If adaptors increase with by 1, log (pretax income) increases with 1 x

0.133 = 13.3%.
If log assets increases with 10%, log (pretax income) increase with 0.928
x 0.10 = 0.0982.
d) This serious issue would led to the data showing some firms increasing their
performance, productivity, and market value without adapting, but in actual
fact they adapted but used the other brand/system. The result of this issue is
that the firms that did adapt to the ERP will show less positive result. It also
causes a bias in the part of the sample that are non-adapters, when in reality
they are adapters but just of a different system.
e) This statement is true because we accepted all of the alternative hypothesis
but if there was a separation between non-adapters and firms using a
different system, the results would probably be even better for the
companies using the ERP system, unless the competitors systems actually
made them lower their performance, productivity, and market value.
f)
g) Profit margin ration = pretax income/sales.  (0.971 -1)/0.0049 = -5.92

h)
i) B1 = -0.029
ii) To obtain a higher ratio, the nominator has to be proportionally bigger
than the denominator, but for the firms it is unclear if the, in this case,
pretax income are better for big firms or if the sales are better, both
would result in the same ratio. Big firms do not have a higher ratio than
small firms; there is no distinction between small and big firms.
iii) The first part of the equation is correct because when the ratio is split the
denominator becomes negative and therefore moved to the right side. It
provides more variables that can be tested, which means the accuracy of
the test can improve and provide better information regarding the case at
hand. The statement itself is also true.
i)
i) Because the implementation takes two weeks, most of them are started
and completed in the same year, so when the data is sorted by years, the
regression does not recognize this change because it happened during the
same year.
j)
i) Compare start and complete horizontally in table 5 and 6.
ii) H2a is not supported by statistical test.
 iii)

k)
i) The dummy starts kicking in during the period because we are comparing
it to the base line after. Because of that reason we can use it to test it after
the results with the one from “during”, allowing us to test it against 1.
ii)
l) Costs of gods sold decreases and therefore got better and sales got better for
collection efficiency.
m) The initial gain is offset by the complete state.
n) There is no dummy variable to be tested; therefore we cannot test the
significance of it after it is done.
o)
i) “Additional”, that word means multiple things depending on if H3a is
known or not.
ii) Table 6, Tobin’s Q value.
iii)

iv)
p) 1.6/7.9 = 20%, first part of the claim is correct.