Econometrics

The purpose of this thesis is to present an
econometric model for the region of Palm Beach County. This
type of economic analysis was chosen because it captures the
influence of the service and trade industries as well as the
simultaneous nature of other industries which dominate the
local economy.
The estimation results identified the construction
industry as a leading indicator of economic activity in
transportation, communications, utilities, finance,
insurance and real estate. This simultaneous structure of
the model led to the application of various multipler
analyses. It was found that local construction output
affected gross regional product, local personal income and
local total employment. National personal income was found
to influence local trade which in turn affects levels of
local output, employment and income.

This thesis tests whether a simple income-expenditure
model is a better predictor of induced
expenditure and thus income than a simple quantity
theory model. A spectral analysis was performed
using alternative definitions of money, income and
expenditure. From the results of cross spectral
analysis, it was concluded that the money supply
is the better predictor of short run (8 months -
3 years) fluctuations in consumption and thus in
income.

This paper brings together the auditor quality, asset reliability and firm valuation literatures by examining the role of auditor quality in equity valuation. The study broadly follows the Richardson et al. (2005) categorization of the reliability of accounting accruals of balance sheet components and conjectures that the role of auditor quality in equity valuation is more pronounced when asset reliability is not high. Auditor quality is measured using reputation, industry specialist and tenure metrics. The underlying assumption is that auditor quality enhances the market's perception of firm value; as such, auditor quality may mitigate the cost of security mispricing documented by Richardson et al. (2005) for low or medium reliability accruals. The results of the study provide some support that high quality auditors contribute to the valuation of equity for assets. It is less clear as to whether the value is more pronounced for low or medium reliability assets.

The primary aim of software engineering is to produce quality software that is delivered on time, within budget, and fulfils all its requirements. A timely estimation of software quality can serve as a prerequisite in achieving high reliability of software-based systems. More specifically, software quality assurance efforts can be prioritized for targeting program modules that are most likely to have a high number of faults. Software quality estimation models are generally of two types: a classification model that predicts the class membership of modules into two or more quality-based classes, and a quantitative prediction model that estimates the number of faults (or some other software quality factor) that are likely to occur in software modules. In the literature, a variety of techniques have been developed for software quality estimation, most of which are suited for either prediction or classification but not for both, e.g., the multiple linear regression (only for prediction) and logistic regression (only for classification).

I examine the impact of real earnings management (REM) and corporate governance on cash holdings. Extant research documents an increase in both cash holdings and REM activity in recent years and shows that agency conflicts influence both the levels and valuations of cash holdings. Motivated by agency problems of REM and Jensen's (1986) arguments concerning the free cash flow problem, I investigate whether opportunistic asset sales and reductions in discretionary expenditures are associated with levels and valuations of cash holdings. Prior research also shows that strong corporate governance mitigates opportunistic earnings management behavior and enhances the valuation of cash holdings. Using empirical models from prior research, I document that REM is positively associated with cash holdings, investors discount cash holdings of high REM firms, and, among high REM firms, valuations of cash holdings of weak corporate governance firms are discounted significantly lower relative to those of strong corporate governance firms. My study unites two lines of research by incorporating agency problems concerning REM with levels and valuations of cash holdings.

For a segmented regression system with an unknown change-point over two domains of a predictor, a new empirical likelihood ratio test statistic is proposed to test the null hypothesis of no change. The proposed method is a non-parametric method which releases the assumption of the error distribution. Under the null hypothesis of no change, the proposed test statistic is shown empirically Gumbel distributed with robust location and scale parameters under various parameter settings and error distributions. Under the alternative hypothesis with a change-point, the comparisons with two other methods (Chen's SIC method and Muggeo's SEG method) show that the proposed method performs better when the slope change is small. A power analysis is conducted to illustrate the performance of the test. The proposed method is also applied to analyze two real datasets: the plasma osmolality dataset and the gasoline price dataset.