Question

Concerned about her current customer base, manager Andersen started to think of factors that might affect the attractiveness of an auditing firm. Of course, the provided service quality and the fees charged by the auditor seem two important factors. Next, she decides that reputation of the auditing firm also needs to be included in the framework as an independent variable. As illustrated by the dramatic effects of recent auditing scandals, reputation seems especially important for large auditors (i.e., auditing firms that are large in size). Finally, manager Andersen thinks that also the proximity of the auditing firm to the customer is another variable to be included as an independent variable. Proximity very likely affects the possibility for the client to personally meet with the auditors on a regular basis and she knows from her own contact with customers that they perceive personal interactions as quite important

1. Write two objectives for this study
2. What is the dependent variable?
3. What are the independent variables?
4. What is the moderating variable? And mediating variable if available?
5. Develop a theoretical framework (sketch a diagram to show clearly the relationship between variables).

1. Formulate two sets of hypotheses in words (one directional and one non-directional).

1. Directional hypothesis (H0 & Ha)
2. Non-directional hypothesis(H0 & Ha)

Answer 1

1. Two objectives for this study are:-

• What are the Factors Affecting the attractiveness of the auditing firm.
• And the factors relationship between current customer base. B.Depende variables in this study As it is mentioned in the first objective that attractiveness of the auditing firm is affected by various factors, this means that Attractiveness of the auditing firm is dependent.
• Secondly, the current customer base C.Independe variables in this study

• Reputation of the auditing firm
• Fees
• Service quality
• Proximity D.Moderating variables are the ones when the relationship between the two variables affects the third variable and that third variable will be the moderating variable. Here the moderating variable is the Auditing scandal as because of its effects, reputation seems important for the large auditors. And as "Proximity very likely affects the possibility for the client to personally meet with the auditors on a regular basis", so personally meeting with the auditors will also be the moderating variable.

Mediating variables are the ones which explain the relation between the dependent and independent variables. Here Mediating variable is

• How Reputation of the auditing firm is affected by auditing scandals.
• And how the possibility for the clients to meet on a regular basis depends on proximity. E.Shown in the image. A. Directional hypothesis shows the effect of one variable on the other either in a negative or positive ways. For example- Dependent and independent variables are directly affecting the attractiveness of the Auditing firm.
• Indirectional hypothesis shows the relationship between two variables and does not predict any type of effect. For example- Reputation seems to be important because of effects of auditing scandals.