In a 1993 article in Accounting and Business Research, Meier, Alam, and Pearson studied auditor lobbying on several proposed U.S. accounting standards that affect banks and savings and loan associations. As part of this study, the authors investigated auditors’ positions regarding proposed changes in accounting standards that would increase client firms’ reported earnings. It was hypothesized that auditors would favor such proposed changes because their clients’ managers would receive higher compensation (salary, bonuses, and so on) when client earnings were reported to be higher. Table (below) summarizes auditor and client positions (in favor or opposed) regarding proposed changes in accounting standards that would increase client firms’ reported earnings. Here the auditor and client positions are cross-classified versus the size of the client firm. Large Firms Small Firms Total In Favor 13 130 143 Opposed 10 24 34 Total 23 154 177 Large Firms Small Firms Total In Favor 12 120 132 Opposed 11 34 45 Total 23 154 177 Click here for the Excel Data File (a) Test to determine whether auditor positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use α = .05. (Round your expected frequencies to 2 decimal places and final answer to 3 decimal places.) b) Test to determine whether client positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use α = .05. (Round your expected frequencies to 2 decimal places and final answer to 3 decimal places.)
In a 1993 article in Accounting and Business Research, Meier, Alam, and Pearson studied auditor lobbying on several proposed U.S. accounting standards that affect banks and savings and loan associations. As part of this study, the authors investigated auditors’ positions regarding proposed changes in accounting standards that would increase client firms’ reported earnings. It was hypothesized that auditors would favor such proposed changes because their clients’ managers would receive higher compensation (salary, bonuses, and so on) when client earnings were reported to be higher. Table (below) summarizes auditor and client positions (in favor or opposed) regarding proposed changes in accounting standards that would increase client firms’ reported earnings. Here the auditor and client positions are cross-classified versus the size of the client firm.
| Large Firms |
Small Firms |
Total | |
| In Favor | 13 | 130 | 143 |
| Opposed | 10 | 24 | 34 |
| Total | 23 | 154 | 177 |
| Large Firms |
Small Firms |
Total | ||
| In Favor | 12 | 120 | 132 | |
| Opposed | 11 | 34 | 45 | |
| Total | 23 | 154 | 177 | |
Click here for the Excel Data File
(a) Test to determine whether auditor positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use α = .05. (Round your expected frequencies to 2 decimal places and final answer to 3 decimal places.)
b) Test to determine whether client positions regarding earnings-increasing changes in accounting standards depend on the size of the client firm. Use α = .05. (Round your expected frequencies to 2 decimal places and final answer to 3 decimal places.)
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