Fraud Chapter 11 Powerpoint

Association it is a two step process regression

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Unformatted text preview: on measures the nature of the association Regression nature between the variables. between – Correlation measures the strength of the association Correlation between the variables. between IES-Tomkins College 19 Regression/Correlation Analysis Regression/Correlation TYPES OF REGRESSION: Simple Linear Regression or Bi-Variate Simple Regression Regression – Two variables: » A dependent variable which is usually cost in our dependent analyses. analyses. » An independent variable or predictor variable which An is usually the measure of the volume of activity in our analyses. our IES-Tomkins College 20 Regression/Correlation Analysis Regression/Correlation A positive (+) value for b indicates that the dependent and positive the independent variables are positively correlated (moving in the same direction). A negative (-) b value indicates that the dependent and the independent variables are moving in opposite directions. (Example, and increase in interest rates is related to a decrease in construction costs.) costs.) The a value indicates point where the regression line The crosses the “Y” axis. What does a negative? positive? value for a indicate? indicate? IES-Tomkins College 21 Regression/Correlation Analysis Regression/Correlation The coefficient of determination measures the amount of The explained variance (i.e. Of the total variance of the dependent variable about its mean (average) value, the amount of that variance that can be explained by changes in the volume of activity is measured by the coefficient of determination.) For example, a coefficient of determination of .84 or 84% means that 84% of the dependent variable’s total variance can be explained by changes in the volume of activity. changes Association vs. Causation - Regression/correlation analysis Association shows the degree of association between variables, but it does not prove causation. IES-Tomkins College 22 Regression/Correlation Analysis Regression/Correlation Standard Error of the Estimate: Standard Indicates the variability of the data used in the regression calculations. The greater the variability of the data, the less precision that results from estimates made from the regression data. – Point estimates are made and confidence Point inter...
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