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Research on Relationship between CDS score and Performance

   

Added on  2020-05-08

14 Pages3073 Words133 Views
Chapter: 1Results ContentsChapter: 1Results.................................................................................................................................11.1Data analysis (Inferential analysis)..............................................................................................11.2Independent sample t test.............................................................................................................11.2.1Correlation analysis.............................................................................................................51.2.2Regression analysis..............................................................................................................71.3Hypothesis testing......................................................................................................................101.4Discussion..................................................................................................................................111.5Limitations.................................................................................................................................121.6Further Research........................................................................................................................12

1.1Data analysis (Inferential analysis)In this section the results from the inferential analysis has been shown. For the analysis purposesecondary data has been collected for 25 different companies listed in US stock market. Sincethis research is aimed to examine the relationship between the CDS score and the performance ofthe firm as the legitimacy theory states that the companies who are performing well in terms offinance have better CDS score as compared to the companies who are not performing well. Inthis case the financial health of the companies has been measured in terms of differentparameters. This includes the EBITDA, market capitalization, beta and earnings per share (EPS).Among all the indicators of the financial performance of the company, EBITDA has been takenas the main variable of interest. To find the relationship between the CDS and the EBITDA different inferential analysis has beenperformed. In the first section the difference between the CDS score of the companies on thebasis of their financial performance has been analyzed using the independent sample t test. In thesecond section the correlation analysis has been performed to examine the relationship financialperformance and the CDS score. Finally the regression analysis has been conducted to find theimpact of financial performance on CDS score for the selected companies. 1.2Independent sample t test The independent t test has been conducted to see whether there is significant difference in theCDS score of the companies on the basis of their financial performance. For the t test companiesincluded in the analysis were categorized into groups. The first group consists of thosecompanies who earn profit (positive EBITDA) and the second group who have negativeEBITDA (loss). So the independent sample t test has been performed to see whether there isdifference in their CDS score or not. Results are shown in the table below.Group StatisticsEBITDA_1NMeanStd.DeviationStd. ErrorMeanCDSGood_performance782.865.5212.087

bad_performance1881.785.3311.257Table 1 Comparing mean of the good performing and bad performing firmsAs shown in the table above the group statistics shows that the mean CDS score of thecompanies who perform well in terms of EBITDA is 82.86 whereas the mean score of the othergroup is 81.78. This shows that the mean score of the companies with high EBITDA is more;however the difference in mean score is not so high. Independent Samples TestLevene's Testfor Equalityof Variancest-test for Equality of MeansFSig.TdfSig.(2-tailed)MeanDifferenceStd. ErrorDifference95%ConfidenceInterval of theDifferenceLowerUpperCDSEqualvariancesassumed.006.941.45023.6571.0792.397-3.8796.038Equalvariancesnot assumed.44310.646.6671.0792.436-4.3036.462Table 2 Results from independent sample t test Similarly the results from the independent sample test shows that the F statistic for the Levene’sTest for equality of variance is 0.006 which is not statistically significant as the p value is 0.941.On the basis of these results it can be said that there is no signficant difference in mean of CDSscore for the good performing countries and the bad performing countries. Similarly the resultsfrom the t-test for equality also indicate that the t statistics is positive. This shows that the meanCDS score of good performing companies is higher than that of bad performing companies.

However in this case also p value is not statistically significant. So the null hypothesis of equalmeans cannot be rejected.Figure 1 comparing the variance in the CDS score for good performing and badperforming companiesAs shown in the box plot above the spread in the bad performing companies is higher ascompared to those who are performing financially well. However the difference is not so high soit can be said that the variance is not so high.

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