Chapter 2.6, Problem 2.101ACI

Executive networking and firm performance. Do firms with executive directors who network with executives at other firms perform better? This was one of the questions of interest in a study published in the Journal of Accounting Public Policy (Vol. 34. 2015). One measure of firm performance used in the study was annual return on equity (ROE), recorded as a percentage. Data collected over a 5-year period for executive directors at 147 firms yielded the following summary statistics on ROI: mean = 13.93,

$\text{<x-custom-btb-me data-me-id="2409" class="microExplainerHighlight">median</x-custom-btb-me>}\text{=}\text{14}\text{.86}$,

5th percentile = – 19.64, 25th percentile= 7.59, 75th percentile= 21.32, 95th percentile = 38.42, and standard deviation= 21.65. Give a practical interpretation of each of these statistics. Then, use this information to draw a sketch of the distribution of the ROI values for the 147 firms.