Business Analytics and Data Visualisation Business Report – Semester 2, 2023

Around the world, policymakers and regulators are pursuing strategies to enhance the presence of women on corporate boards. In various European countries, this drive has taken different forms, with some adopting gender quotas and others employing networking and mentoring programs to expedite women’s advancement in leadership positions. For instance, Norway and Spain currently enforce mandatory gender quotas, requiring a minimum of 40% female board representation, while France has set the bar even higher at 50%, imposing penalties for non- compliance. In contrast, Australia has no equivalent legislative mandate in place, but it has witnessed a significant voluntary increase in the number of women serving as directors on corporate boards.

Recent findings from the Australian Institute of Company Directors (AICD) illustrate this trend. The percentage of female directors on the boards of the Top 200 firms listed on the Australian Securities Exchange (ASX) has experienced substantial growth over the years, rising from 8.3% in 2009 to 28.2% in 2017 and reaching 32.9% in 2021.1 For the Top 300 ASX firms, this figure has climbed to 35% in 2023, up from 32% in 2022.2 Additionally, there has been a noteworthy increase in the number of female directors on boards of smaller companies, with a 15% increase in 2022. Nevertheless, despite these advancements, there are still 15 companies among the Top 300 ASX firms that lack female director representation on their boards.

The psychology literature has consistently demonstrated that women typically express a reduced inclination to embrace risks when compared to men. This phenomenon is, in part, attributable to women having higher levels of loss aversion. Consequently, the AICD wants to investigate the advantages associated with gender-diverse boards so that they can provide recommendations to Australian regulatory bodies in this regard.

You, as an analyst of market research division of the AICD, need to report to the AICD board of directors to see whether female participation in company boards is associated with lower risk. You choose the company cost of debt (CoD) as a measure of firm risk. The CoD refers to the interest payment obligation linked to borrowed funds. In simpler terms, it represents the interest

‌1 https://aicd.companydirectors.com.au/advocacy/board-diversity/statistics

‌2 https://www.governanceinstitute.com.au/news-media/media-releases/2023/apr/2023-board-diversity-index/

rate owed by a company for any financial obligations, such as loans and bonds. The extent of the cost of debt is determined by the creditworthiness of the borrower (i.e. company), with higher costs indicating a higher perceived risk associated with the company.

You begin the analysis by selecting the Top 500 companies listed on the ASX as at the end of the 2022 financial year (i.e. 30 June 2022). These ASX-listed companies are categorised based on their industry sectors, and there are a total of 11 industry sectors in the Australian market. They include Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Real Estate, Communication Services, and Utilities. For the purpose of your analysis, you have chosen to focus on three specific industry groups: Energy, Health Care, and Consumer Staples. Each individual company is classified under one of these industry sectors. You have collected the necessary data for 100 companies within each of these three industry sectors.

A board of directors with women representation is referred to as a “gender-diversity board,” whereas a board of directors with no women representation is termed a “non-gender diversity board.” The data pertaining to these boards are stored in the Excel file named “ECOM5005_BR_2023_s2_datafile.xlsx” and organised as follows:

Column A: Firm ID

• To describe the ID of each firm in the sample, ranging from Firm 1 to Firm 300.

  Column B: Cost of Debt (CoD)

• The cost of debt, expressed in percentage, is calculated as the total interest expense scaled by total interest-bearing debt in 2022. The CoD would be equal to zero if the company does not have any debt.

  Total interest expense

  Total interest − bearing debt

  x100

  Column C: Industry group

• There are 3 industry groups in the sample. They are Energy, Health Care and Consumer Staples

  • 1 = if a company belongs to the Energy industry sector

  • 2 = if a company belongs to the Health Care industry sector

  • 3 = if a company belongs to the Consumer Staples industry sector

    Column D: Gender-diversity board

• Indicate if the company board of directors has any female director.

  • 1 = there is at least one female director on the board (gender diversity board)

  • 0 = there is no female representation on the board (non-gender diversity board)

You need to address the following questions as part of your written report to the ASIC Board of Directors.

1. Does the representation of female directors on the board of directors depend on industry sectors?

2. Do companies with gender-diversity boards have a lower cost of debt (CoD), compared to those without female representation on the board?

3. Is there any difference in the cost of debt (COD) among the three industry sectors, namely Energy, Health Care and Consumer Staples?

   DUE DATE

   Your business report is due on Monday 16 October 2023 at 9am (Perth time).

   • There are two components of your business report that need to be submitted: written report and Excel working file. They should be submitted in Blackboard

     • The name of your Excel file should be

       “YourStudentID_LastName_Excel_workings.xlxs”

   • The written report is the Turnitin assignment, designed to prevent plagiarism. Further information about Turnitin can be found on the university website: https://academicintegrity.curtin.edu.au/students/Turnitin_student.cfm

     • There should be no assignment coversheet for the written report. You should put

       your name, student ID and email address in the header of the written report.

     • When submit to Blackboard, you should convert your written report to pdf file, and the name of your report should be “YourStudentID_LastName_report.pdf”

   • The location of Blackboard submission points for the written report and Excel workings is “Assessments Assessments 2: Business Report [40%]”

     If business reports are not submitted by the due date,

   • a deduction of 5% of the total marks allocated (i.e. 5% of 40 = 2 marks) for the business report will be deducted from the assessment mark if the reports are submitted within the first 24 hours of the due date,

   • for each additional 24-hour period, an additional penalty of 10% (i.e. 10% of 40 = 4 marks) of the total marks allocated for the business report will be deducted from the assessment mark, and

   • zero mark will be recorded after seven (7) days from the due date.

     FUTHER INSTRUCTIONS

   • The report covers hypothesis tests from Module 5 to Module 8. However, Module 4 which contains data collection and sampling should be also discussed in your report.

   • The report should have the following structure: Introduction, Statistical Analyses (where you perform hypothesis tests for each of the four questions) and Conclusions (where you summarize the findings and discuss the limitations).

   • Your report should also include technique identification and any underlying assumptions required (with checking for the required assumptions).

     • Why do you use a particular technique? Consider the types of data – quantitative, qualitative or ranked? How many samples? Are these samples independent?

     • What are the underlying assumptions? Have you checked the assumptions?

       • Checking for normal distribution will be done by observing the histogram and discuss its shape.

       • If the histogram does not show normal distribution for the sample, you keep doing the test with the underlying assumptions, but need to discuss this as one of your limitations in the overall conclusion.

   • The parameter of interests and populations must be clearly defined.

   • Checking normal distributions by observing histograms

     • Histograms are obtained from Excel

     • Excel automatically produce the histogram with gap (default at 150%). You need to reduce the gap to 0% (right click to the histogram, then choose Format Data Series, then reduce the Gap Width to 0%)

       • Students can see the following video recording for creating a histogram in Excel

         https://echo360.net.au/media/b0ab790e-b6af-4383-a770-29f9ca35d0c8/public

   • For each of the tests, you need to perform at 3 significance levels (1%, 5% and 10%) and the decision to reject or accept the null hypothesis must refer to all 3 significance levels.

   • This is a computing assignment. You are expected to use Excel to perform relevant tests (t-test and F-test). Descriptive statistics are also obtained from Excel.

     • In the report, you need to describe the procedure of obtaining relevant tests.

     • The results obtained from Excel are presented in the report. The tables must be clear to read. Each test has to be performed for 3 levels of statistical significance (1%, 5% and 10%).

       • Do not present 3 tables for each significant level. Please condense all the results in one table only.

     • For t-tests, Excel reports the results for one-tailed and two-tailed tests. You need to report only the critical value of one-tailed test or two-tailed test, but not both.

     • The following tests are not embedded in Excel: testing for the difference between two proportions, and chi-square test.

       • You can use Excel for calculations based on textbook formulae, then find critical values from Appendix A of the textbook.

   • The report (including tables, calculations and histograms) must not exceed 12 pages; marks will be deducted for exceeding the limit. Pages must be correctly numbered throughout.

   • For each question above, perform separate statistical tests to answer the questions. This assignment should be presented in a professional manner and you need to demonstrate that considerable thought has gone into the analysis of data.

   • The marking criteria for each of the question should be as follows:

     • Technique identification: why should you use a certain technique?

     • Define the populations and parameters of interest

     • Checking the conditions of the chosen technique: If a certain condition is not met, you keep doing the test as usual but need to discuss the limitation in the Conclusions part

     • Following 6 steps in the hypothesis testing procedure

       • Describe the procedure to obtain the relevant tests

       • Present Excel results in table

       • Clearly mention the test statistic, rejection region

     • Decision to reject or accept the null hypothesis must be referred to all 3 significance levels, that is, 1%, 5% and 10%.

     Mark Allocation:

   • The total marks for the assignment is 40 (account for 25% of your final mark)

   • Each question from 1) to 3) is worth 10 marks

   • 3 marks for presentation

     • Your report should be clear for reading, presented in a good format with separate sections for (original) Introduction, Statistical Analyses and Conclusions.

     • Please use the font size 12, Times New Roman, 1.25 line spacing.

     • You should put your name, student ID and email address in the header of the written report.

   • 3 marks for the Excel workings file.

     • The Excel workings file should have a separate tab for each of the three questions

   • 4 marks for an overall summary of your results, interpretations and any limitations.

     • The summary should be an evaluative response of the results of significant differences found amongst the variables conducted in the tests and any qualifying statements made about the nature of the testing data used.

     • Limitations of the tests should be discussed.