BUS80003 Research Methodology
Research Questions and Motivation
This is an individual assignment worth 20 marks (20% of the unit grade).
See attached a brief description of some research conducted by a university in Australia. The researchers hope to publish the paper that comes from this research in a major scholarly journal. For this assignment, you will need to analyse some key aspects of the research as described.
As an expert user of research you are asked to identify the (1) research question or questions, hypothesis or research model and assess whether they are valid and appropriate, and (2) the motivation for this research. Again assessing the substance and appropriateness of the motivation. For both (1) and (2), discuss whether the researchers could have enhanced their research and if so, how?
Each part (1) and (2) are worth ten marks each.
You should submit your written assignment in Blackboard on Turnitin. See the video on using Turnitin for assignments in the Assignments section of the Blackboard site if you are not familiar with its use. Also, submit a hard copy of your assignment to the Assignment Box (opposite the lifts) on level 11 of the BA building.
As a guide, you might consider an assignment of about 1750 words or so. Longer submissions are acceptable as long as they are succinct not just ‘padded’. And shorter submissions are also accepted. In other words, write what you think is needed to address the issues that need to be discussed in the assignment. Quality of discussion is important.
Assignments are due on September 5th at 4pm as specified in the Unit Outline. As per University policy, late assignments will draw a 10% penalty for each day or part thereof that they are late.
The Economic Benefits of Predicting Corporate Distress.
The Department of Finance at the university is seeking to investigate the ability of humans to predict corporate financial distress and even failure as it has not been done before in Australia. Where it has been examined, it has been researched using actual examples of corporate financial distress and the real predictions of bankers and analysts in the real world. “There has been no attempt to do the research this way which will eliminate lots of extraneous factors that occur in the real world and just go to mess up the integrity of research” Professor Nugent, the lead investigator, was quoted as saying. He added, “If we can design a way for humans to correctly predict corporate distress or failure with accuracy, then we can make a small fortune”.
They have recruited a total of 60 MBA students all of whom have at least 5 years work experience. Some are in the first year of their graduate studies others are almost complete. All claim to have “advanced financial literacy”.
The participants are randomly assigned to one of two groups (Group A and Group B). Both groups are given 30 abbreviated sets of financial statements for three years ending in the past twelve months. The 30 companies are all real but disguised. Each participant is asked to “Predict whether the company will experience financial distress within the coming twelve-month period”. Financial distress is defined as “a company having to accept emergency loans or other fund raising or entering into liquidation or voluntary administration”. That first question is simply ‘Yes’ or ‘No’. Participants are then asked to rate their confidence in this outcome from 1 (low) to 7 (high).
Participants in Group A are rewarded with a payment of $100 for participating in the study. Participants in Group B are rewarded with $20 for each company they correctly classify as “distressed” or ‘not-distressed”.
Both groups commence the task under laboratory conditions in separate rooms on campus – there are no distractions. The first participant to complete the tasks is from Group A. She completes the task in just 27 minutes. Two more from her group finish at the 40-minute mark, and then there is a “wave” of completions. The last person to finish in Group A takes just under 2 hours. The mean time taken is 52 minutes.
By comparison, the first person to finish in Group B takes 65 minutes. All are complete in just under two hours. The mean or average time is 81 minutes.
On average Group A and B participants both predict about 50% of cases as ‘distressed’ and both get about 30% of the prediction “right” (that is, the participants predict correctly what actually happened to the company in real life). The average level of confidence of the predictions in Group B was statistically significantly higher than Group A.
All of Group A participants collect their $100 participant fee. Participants in Group B average $310 in fees and all but one participant collects their reward. The total cost is much more than your budget. Some of the reward money must come from your personal funds.