E-Business Impact on Stock Prices: Research Design & Methodology

This report details the research design and methodology employed to analyze the impact of e-business, particularly on the stock prices of companies in the mining and capital goods industry in Australia. It begins by defining e-business and highlighting the gap in existing research regarding its economic aspects. The research design is quantitative, utilizing time series data of stock prices from three selected companies: Austin Engineering Company Ltd., Boart Longyear Ltd, and BauMart Holdings Limited. Key research questions address the extent of e-business influence, implementation implications, empirical methods for determining its effect, the relationship between company size and impact, and the connection to different types of e-business models. Data collection relies on secondary sources, including annual reports and stock price websites. Parameters used include Earnings per Share (EPS), Market Share Value, Net Profit, and Price Earnings Ratio. The analysis employs time series regression analysis, requiring a stationary test to ensure data validity. The report concludes by emphasizing the importance of the research question and selecting an appropriate econometric model, noting the limitations and advantages of different approaches. Desklib provides access to this and other solved assignments for students.

Chapter 3
Research Design and Methodology

Table of Contents
1. Introduction...................................................................................................................................3
2. Research Design............................................................................................................................3
3. Research Questions.......................................................................................................................4
4. Data Collection Methods...............................................................................................................4
4.1 Data Sampling..............................................................................................................................5
4.2 Parameters Used.........................................................................................................................6
5. Approaches Used in this Research.................................................................................................7
6. Conclusion.....................................................................................................................................8
7. References.....................................................................................................................................9

1. Introduction
The term e-business may be defined as the use of information technology in the business
process. E-business is often confused with e-commerce; however, it is a superset of e-
commerce. E-business incurs additional tasks like communicating with other parties
involved, management along with the routine commercial tasks (Laudon and Laudon, 2002;
Greenstein and Feinman, 2000; Turban et. al., E., 2002). Most of the researches have viewed
business from the technical, administrative, executive or judicial viewpoint. But it is worth
noting that the economic aspect of business gives some insightful information about company
value and profits. It answers questions like benefits of bringing business in practice for
company growth. In this chapter, the research methodology adopted is discussed. It addresses
the research questions and research plan of the analysis undertaken. Based on the previous
research the economic aspect of e-business has not been reviewed in detail (Chong, 2002;
Cummings, 2001).
There are numerous purposes for these deficiencies. One lies in the way that the current
techniques for venture legitimization are not in any case reasonable for IT anticipates let
alone for e-business ventures. The following issue is associated with the reality of quickly
changing marvels around there. Because of the changing idea of e-business, it is in this way
extremely hard to build up and inspect different money related models. As needs are, the best
possible financial evaluation of e-business ought to incorporate – other than standard
monetary hypothesis approach - the highlights of customary IT anticipates and furthermore
the highlights identified with the particular idea of e-business.
2. Research Design
More observational research is expected to measure the impacts of e-business on the macro
economy. While profitability upgrades from the utilization of ICT by business are presently
broadly recorded, segregating the impact on the efficiency of particular types of e-business,
for example, B2B internet business remains a troublesome accomplishment. This reality
mostly follows from the generally beginning nature of the web-based business. As online
markets proceed to develop, and insights on e-business movement enhance, one ought to
expect more de-followed examinations of the effect e-business has on total efficiency levels

to be possible. This research aims to analyze statistically and quantitatively the impact of
adoption of e-business on stock prices of mining and capital goods industry in Australia.
Three companies are selected for analysis of their stock prices. The details of the data set are
given in the proceeding sections. The various statistical tests will be used for analysis, the
historic growth in stock prices and the returns give a major insight into the company’s
growth.
3. Research Questions
The e-business impacts are large and significant thus to establish this statement a number of
research questions are to be answered to reach any conclusion. Keeping in view the existing
research in the area of e-business and the state of the art methods this research aims to find
the answers to the following question:
1. What is the extent up to which e-business can influence the companies?
2. What are the implications for the implementation of e-business?
3. Is there any existing empirical method for determining the effect of e-business on
companies’ growth?
4. What is the interconnection between the size of the company and impact of e-
business?
5. How is growth related to different types of e-business like Business to Business,
Business to Customer etc.?
4. Data Collection Methods
Economic data exist in various forms, it depends on the type of econometric analysis being
performed decides the form of data. The data can be cross-sectional data, pooled data and
time series data. In this work, time series data of stock prices is used:
 Time Series Data: A period arrangement informational collection comprises of
perceptions on a variable or a few factors over time. Cases of time arrangement
information incorporate stock costs, cash supply, customer value file, total national
output, yearly manslaughter rates, and vehicle deals figures. Since past occasions can
impact future occasions and slacks in conduct are predominant in the sociologies,

time is an imperative measurement in a period arrangement informational index.
Dissimilar to the course of action of cross-sectional information, the sequential
requesting of perceptions in a period arrangement passes on conceivably essential
data. A key component of time arrangement information that makes them more hard
to investigate than cross-sectional information is that financial perceptions can once in
a while if at any point, be thought to be free crosswise over time. Most financial and
other time arrangement are connected, regularly firmly related, to their current
chronicles.
Data collection methods for research in economics can be classified into two broad categories
these are primary data and secondary data. As the name suggests primary data collection
methods include direct methods of communication with the subjects for conducting the
research. However secondary data collection is the method in which the researcher does not
collect the data directly rather the existing data stores are used for research. The data may be
collected by some other researcher or available in form of printed reports or magazines. The
selection of method depends entirely on the application for which data is being collected
(Abdullah & Wan, 2013). In this work, secondary methods have been used and comprise of
annual reports available on the registered firm's websites and the stock prices website that
contain time series data.
4.1 Data Sampling
Initially, a large number of companies from Australian market were chosen for the analysis
but to get the clear and in-depth analysis. The following three companies were chosen for
final analysis. The details of which are as follows:
 Austin Engineering Company Ltd.: Austin Engineering Company Ltd.,
incorporated in the year 1978, is a Small Cap company (having a market cap of Rs
24.03 Crore) operating in the Engineering sector.
 Boart Longyear Ltd: This Company offers agreement based drilling facilities to the
mining, ecological and substructure, and energy businesses, and productions drilling,
coring, crushing pieces of equipment and tools.
 BauMart Holdings Limited It is a developing business, pointing to enlarge its
circulation system all over Australia. The firm is a contractor of construction goods to
the housing and marketable building businesses.

4.2 Parameters Used
The parameters or variables used in this study are as follows:
 Earnings per Share: EPS is a money related proportion, which isolates net profit
accessible to regular investors by the aggregate remarkable offers over a specific
timeframe. The EPS recipe shows an organization's capacity to create net benefits for
basic investors. A solitary EPS esteem for one organization is to some degree self-
assertive, however, the number is more important when dissected against different
organizations in the business, and when contrasted with the organization's offer value
(the P/E Ratio). Between two organizations in a similar industry with a similar
number of offers exceptional, higher EPS demonstrates better gainfulness. EPS is
normally utilized as a part of conjunction with an organization's offer cost to decide if
it is moderately "modest" (low P/E proportion) or "costly" (high P/E proportion). The
formula to compute EPS is as given in equation (1).
EPS= T otal Earnings
Outstanding shares ( 1)
Where
Total Earnings=Net income−Preferred Dividends
 Market Share Value: The market share value specifies the market value of the share.
It gives the price of each share in the market.
 Net Profit: Net benefit speaks to the quantity of offers dollars staying after every
single working cost, premium, charges and favored stock profits (yet not basic stock
profits) have been deducted from an organization's aggregate income. The formula to
compute net profit is given in equation (2).
Net Profit=Total Revenue−Total Expenses (2)
 Price Earnings Ratio: The Price Earning proportion, often called the P/E proportion
or price to revenue proportion, is a market prospect proportion that figures the market
estimation of a stock in respect to its income by looking at the market cost per share
by the profit per share. At the end of the day, the value income proportion
demonstrates what the market will pay for a stock in light of its present profit.

Financial specialists regularly utilize this proportion to assess what a stock's equitable
esteem ought to be by anticipating future income per share. Organizations with higher
future profit are typically anticipated that would issue higher profits or have
acknowledging stock later on. Clearly, honest estimation of a stock depends on
something beyond anticipated future income.
5. Approaches Used in this Research
E-business expands business profitability by lessening exchange and pursuit costs, bringing
costs related down to transportation and looking after inventories, and extending access to
extra information and retail showcases (Basu and Siems 2004). In the total, these profitability
picks up result in higher work efficiency and higher monetary development. In this area, we
survey the related exact proof. In this work time series regression analysis is done to analyze
the data of the three companies under study.
The time series data consists of two variables y andz, where yt and zt are the values at time t.
A static model is defined as
yt =β0+ β1 zt +ut ,t=1,2,3 , … . , n
The model postulates that a change in z at time t directly influences the change ∆ yt and thus
the regression model aims at finding the regression coefficients β0, β1 . Here y is dependent
variable and z is the independent variable. Keeping in mind the end goal to gauge the
parameters in β in the direct relapse (1), the standard approach is to apply OLS estimation.
One approach to propel OLS is to consider the supposed minute stating that the explanatory
variables should be uncorrelated with the error term (Wooldridge, 2003). When dealing with
the stock prices stationary test is required with OLS.
 Stationary Test: A period arrangement yt (t=1,2...) is said to be stationary if its
quantifiable possessions don't fluctuate with time. The background noise an instance
of a static interval plan, with for example the condition where yt receipts afterward a
normal transmission independent of t. Identifying that a plan isn't fixed certificates to
a short time later investigation where the non-stationarity sourced from. A non-
stationary preparation can, for example, be static in contrast yt isn't stationary,

however, the yt- yt −1 distinction is stationary. It is the situation of the irregular walk.
An arrangement can likewise be stationary in drift. Stationarity examinations
authorize whether an arrangement is stationary or not. There are two distinctive
methodologies: stationarity tests, for example, the KPSS test that consider as invalid
theory H0 that the arrangement is stationary, and unit root tests, for example, the
Dickey-Fuller test and its expanded adaptation, the increased Dickey-Fuller test
(ADF), or the Phillips-Perron test (PP), for which the invalid speculation is despite
what might be expected that the arrangement has a unit root and subsequently isn't
stationary.
6. Conclusion
From the discussion undertaken in this chapter, it can be concluded that the effect of e-
business on economic growth is an important research question. This research question can
be answered by choosing an appropriate model for econometric analysis. Also, the same
research might not be perfect for all cases as each work has its own limitations and
advantages. It is essential to consider every single basic factor that emerges in choosing the
most fitting one. At exactly that point the analyst will be able to accomplish the exploration
goals in a formalized way. In the next section, we will analyze the data used and the results
will be used to understand the effects.

7. References
Abdullah, A. A. & Wan, H. L., 2013. Relationships of Non-Monetary Incentives, Job
Satisfaction and Employee Job Performance International Review of Management and
Business Research, Vol. 2, pp. 1085-1091.
Basu, A. &Siems, T.F. (2004). The impact of e-business technologies on supply chain
operations: A macroeconomic perspective. Research Department Working Paper 0404.
Dallas: Federal Reserve Bank of Dallas.
Chong, Y. Yen (2002). Delivering on Your e-Promise: Managing e-Business Projects,
Cummings, J. (2001). The e-comm ROI squeeze. Network World, 26.02.01
Greenstein, M., Feinman, M.T. (2000). E-commerce: Security, Risk Management and
Control. Boston (etc.). Irwin McGraw-Hill.
http://vig.pearsoned.com/store/product/1,3498,store.html, [03.04.02]
Laudon, C.K., Laudon P.J. (2002). MIS, Managing the Digital Firm, 7th Edition, New
Jersey, Prentice Hall, Inc. 11.
Turban, E., King D., Lee J. Warkentin M., Chung, M.H. (2002) E-commerce – A
Managerial Perspective, New Jersey, Prencite Hall, Inc.
Wooldridge, Jeffrey M. (2003): Introductory Econometrics: A Modern Approach, 2nd
edition, South Western College Publishing.