INFO411/911: Data Mining and Knowledge Discovery
2017
Assignment 2  7.5 marks
Due: Wednesday 24 May at 23:55 AEST (Australian Eastern Standard Time)
Submission of the answers must be done online by using the submission link that is
associated with this s
Hausman specification test for random effects in crosssection
Model 1
Correlated Random Effects  Hausman Test
Equation: LOG_CH_1
Test crosssection random effects
Test Summary
Crosssection random
ChiSq.
Statistic
ChiSq. d.f.
Prob.
18.809921
8
0.0159
Small Cap
Ratio
Hedging Dummy
Cash/Total Assets
Total Assets
Total Sales
Market Value of Equity
Return on Asset
Dividend Dummy
R&D/Sales
n=156
Mean
Median
0.34
0.212
437.9
319
694
0.066
0.124
0.305
0.0
0.14
308
218
576
0.058
0
0.08
Std.Dev
Minimum
Maximum
5. ANALYSIS
_
The chapter includes a thorough analysis of the results of our regressions and hypothesis tests, based on
the theoretical and empirical framework presented in Chapter 2. We begin discussing the descriptive
statistics, then our variables and
benefits increase, firms hold more cash. This indicates that our sample firms do not base their
cash management decisions on possible tax benefits. Holding costly cash reserves to be able
to move on good investments is probably more important for our firm
meaning that firms had to use their reserves during these years. Building up an optimal cash
reserve may take time, which is why our period may reflect low cash levels.
5.3 Other Determinants of Cash Management
There are other factors than hedging that af
Table 4  Regression results
CH
CH
Model 1
Model 2
Model 3
Model 4
Pooled
Fixed
Pooled
Fixed
Pooled
Fixed
Pooled
Fixed
Intercept
2.5703*
(0.2930)
1.9514
(1.2081)
2.3948*
(0.2848)
2.2415*
(1.2204)
0.2605*
(0.0819)
1.8309*
(0.5048)
0.1409
(0.0968)
1.595
might have to incorporate other measures to find significant results. This result is confirmed
by our second and fourth models when accounting for increased investment opportunities.
Finally, our results may be limited due to a homogenous sample and littl
Altman, E. I. (1968). Financial Ratios, Discriminant Analysis and the Prediction of the
Corporate Bankruptcy. Journal of Finance, vol. 23, no.4, pp. 589609
Altman, E. I. (2000). Predicting Financial Distress of Companies, Revisiting the ZScore and
Zeta
Table 5  Results of hypothesis tests
Model 1
HCH
Model 2
Pooled
Fixed
Pooled
Fixed
H0
DHedge
Rejected
0.0024
Not Rejected
0.2082
Rejected

Rejected

HedgeInvOp


0.0001
0.0671
Model 3
HCH
Model 4
Pooled
Fixed
Pooled
Fixed
H0
Rejected
Not Rejected
Rej
Appendix 4  Descriptive Statistics
Large Cap
Ratio
Hedging Dummy
Cash/Total Assets
Total Assets
Total Sales
Market Value of Equity
Return on Asset
Dividend Dummy
R&D/Sales
n=184
Mean
Median
0.863
0.15
23972
15955
31936
0.08
0.56
0.41
1
0.13
9616
5580
156
Essays in Interfaces of Operations and Finance in
Supply Chains
by
Jianer Zhou
Submitted in Partial Fulfillment
of the
Requirements for the Degree
Doctor of Philosophy
Supervised by
Professor Harry Groenevelt
Professor Nils Rudi
William E. Simon Graduate
SPOTLIGHT ON CASH MANAGEMENT
Spotlight: Interview with Andrea Bjrndalen and Johanna Nilsson
Hedging allows firms to use their
cash reserves on investments
Capital requirements and funding needs is a constant concern for
companies with large investment opp
Model 2
Dependent Variable: LOG_CASH_TA
Method: Panel Least Squares
Date: 05/16/15 Time: 20:22
Sample: 2009 2013
Periods included: 5
Crosssections included: 87
Total panel (unbalanced) observations: 358
White diagonal standard errors & covariance (d.f. c
Appendix 3 Eviews outputs from testing
Redundant fixed effects likelihood ratio test
Model 1
Redundant Fixed Effects Tests
Equation: LOG_CH_1
Test crosssection fixed effects
Effects Test
Crosssection F
Crosssection Chisquare
Statistic
10.301233
526.98
Appendix 5  Robustness tests
Robustness Test with MtB as proxy for Investment Opportunities
Model 1
Dependent Variable: LOG_CASH_TA
Method: Panel Least Squares
Date: 05/16/15 Time: 20:21
Sample: 2009 2013
Periods included: 5
Crosssections included: 87
T
4.2.1 Hypothesis testing
Hypothesis HCH
The models in table 4 are used to test our hypotheses. The first hypothesis, HCH, suggests that
firms that hedge hold less cash than firms that do not use derivatives. The null hypothesis
states that firms are indif
tools when using fixed effects. This is inconsistent with previous research, (Marin and
Niehaus, 2011). The fixed effects regression gives no significant results in Model 3 either,
which seeks to explain the connection closer by examining if hedgers decre
Department of Business Administration
FEKN90, Business Administration
Degree Project Master of Science in Business and Economics
Spring 2015
Cash Holdings from a Risk
Management Perspective
 A study on high investment firms
Author
Fanny Andrea Bjrndalen
make the task of solving for the yield to maturity quite simple.
Yield to Call Example
Find the yield to call on a semiannual coupon bond with a face value of $1000, a 10% coupon
rate, 15 years remaining until maturity given that the bond price is $1175 a
Discount Bonds
A bond is considered to be a discount bond when its price is less than its face value.
This will occur when the coupon rate is less than the required return on the bond.
Example Problems
Find the value for the semiannual coupon bond with th