Reference no: EM131261410

Assignment

I need full 5-8 pages paper in word document and excel sheet work (You will be using this template to complete the assignment) on the following instructions. Please carefully provide full 5-8 pages answer and follow the grading criteria. Include headings prior describing each new section. Must include 5-6 scholarly sources cited in APA.

Instructions:

In the banking industry, the return on equity ratio or percentage is used to evaluate the financial performance of a bank. Such information is extremely valuable to investors.

Calculate the return on equity (ROE) for a sample of 20 banks for the year before the Sarbanes-Oxley Act was enacted. For the same sample of banks, calculate the ROE for the year following the enactment of the Sarbanes-Oxley Act. Provide this work in Excel sheet. You will be using this template to complete the assignment.

Later, answer the following questions:

1. After the enactment of the Sarbanes-Oxley Act, was the average bank's ROE lower than it was before the act? If so, why do you think that was the case?

2. What is the null hypothesis for this hypothesis test?

3. What is the alternative hypothesis for this hypothesis test?

4. Choose at least three different significant levels to conduct the hypothesis test. Is it possible that a Type I error occurred with the hypothesis test? Why or why not?

5. Is it possible that a Type II error occurred? Why or why not?

Submit your answers in a 5-8 pages Word document.

On a separate page, cite all sources using the APA guidelines.

Professors Guideline:

1. Please see attached excel template- You will be using this template to complete the assignment. The cells highlighted in Yellow are input cells and the formulas are already plugged in for your convenience.

2. Pick 20 publicly traded (traded on stock exchange) banks which existed back then and research over the internet the annual ROE for those 20 banks in 2001 and again for the same banks in 2003 (after implementation of SOX act) and enter into the excel file. Typically you can go online to a website like Wikinvest and type the name of the bank and get the historical ROE right from 1990s to date. But you only need annual ROE for 2001 and 2003. For example, I searched for Bank of America ROE and I used the Wikinvest link and found the data: https://www.wikinvest.com/stock/Bank_of_America_(BAC)/Data/ROE/2001

3. Sarbanes Oxley Act (SOX) was implemented in 2002. The objective of the assignment is to examine the ROE before (2001) and after (2003) implementation of SOX. For information on SOX and to get a quick primer please visit: https://www.investopedia.com/terms/s/sarbanesoxleyact.asp

4. There is also a good article on SOX and it can be found at: https://www.nysscpa.org/cpajournal/2008/808/perspectives/p13.htm