Question

Some experts believe that publicly-traded companies engage in greater planning than do privately-held companies. To test this question, imagine that you know population standard deviation for company planning (based on a comprehensive executive survey) for all privately-held companies is 1.65, and for publicly-traded companies is 1.25. What do you conclude?

Firm ID	ownership (private = 1)	firm performance	customer orientation	long-term orientation	benchmarking	planning	risk taking
1	1	4.33	5.50	6.20	5.00	1.00	5.00
2	0	4.00	6.25	4.80	1.83	4.17	5.80
3	0	4.67	6.25	2.00	5.50	5.33	4.80
4	0	4.00	4.25	3.80	1.67	5.00	6.00
5	1	4.67	6.25	5.60	4.50	4.50	5.20
6	1	5.67	5.25	4.20	5.00	2.17	3.00
7	0	2.67	3.00	5.40	5.33	5.50	4.60
8	0	2.67	5.75	3.00	4.33	4.67	6.80
9	1	5.00	6.25	5.00	3.33	3.83	4.80
10	1	6.00	6.25	5.80	3.83	4.33	2.80
11	1	5.00	6.00	3.80	4.00	3.00	3.60
12	0	5.00	6.25	5.00	4.67	3.83	4.20
13	1	5.33	5.50	5.40	2.67	4.00	3.20
14	0	5.00	4.75	5.20	6.67	6.00	1.60
15	0	4.67	6.50	6.80	4.67	5.50	4.00
16	0	4.00	6.75	3.60	5.83	3.83	3.80
17	1	5.33	5.50	3.80	4.83	2.83	3.40
18	0	3.00	5.75	4.80	5.67	3.33	3.20
19	1	2.00	1.00	1.40	3.33	4.33	4.00
20	1	4.67	5.25	5.60	4.50	1.17	4.20
21	0	6.00	5.75	5.00	5.50	4.33	3.00
22	1	5.00	6.50	5.20	5.17	4.00	3.40

Answer 1

The hypothesis being tested is:

H0: µ1 = µ2

H1: µ1 < µ2

Private	Public
1	4.17
4.5	5.33
2.17	5
3.83	5.5
4.33	4.67
3	3.83
4	6
2.83	5.5
4.33	3.83
1.17	3.33
4	4.33
Private	Public
3.1964	4.6809	mean
1.2696	0.8522	std. dev.
11	11	n
	-1.48455	difference (Private - Public)
	0.46104	standard error of difference
	0	hypothesized difference
	-3.22	z
	.0006	p-value (one-tailed, lower)

The p-value is 0.0006.

Since the p-value (0.0006) is less than the significance level (0.05), we can reject the null hypothesis.

Therefore, we can conclude that publicly-traded companies engage in greater planning than do privately-held companies.

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