The given model summary provides information about a regression analysis that was conducted
to understand the relationship between a dependent variable, "ROA" (Return on Assets), and
several predictor variables: "DEM" (Demographics), "IT" (Information Technology), "LEAN"
(Lean Manufacturing), "ABC" (Activity-Based Costing), and "ITO" (Information Technology
Outsourcing).
The model summary includes various statistical measures that can help assess the quality and
significance of the regression model. Let's discuss each measure in detail:
1. R (Multiple correlation coefficient): The multiple correlation coefficient, denoted as R,
measures the strength and direction of the linear relationship between the predictor
variables as a whole and the dependent variable. In this case, the value of R is 0.800,
indicating a strong positive relationship.
2. R Square (Coefficient of determination): The coefficient of determination, denoted as R
Square, represents the proportion of the variance in the dependent variable that can be
explained by the predictor variables. It ranges from 0 to 1, with higher values indicating a
better fit. Here, R Square is 0.639, which means that approximately 63.9% of the variance
in ROA can be explained by the predictor variables in the model.
3. Adjusted R Square: The adjusted R Square is a modified version of R Square that takes into
account the number of predictor variables and the sample size. It penalizes the inclusion of
irrelevant or redundant predictors. The adjusted R Square value of 0.621 suggests that
around 62.1% of the variability in ROA is explained by the predictor variables, considering
the complexity of the model.
4. Std. Error of the Estimate: This measure represents the average distance between the
observed values of the dependent variable and the predicted values from the regression
model. In this case, the standard error of the estimate is 0.39965, indicating the average
deviation of the predicted ROA from the actual ROA is approximately 0.39965 units.
5. Durbin-Watson: The Durbin-Watson statistic is used to detect the presence of
autocorrelation (correlation between the residuals) in the regression model. It ranges from 0
to 4, with a value close to 2 indicating no autocorrelation. Here, the Durbin-Watson value is
1.946, suggesting a moderate positive autocorrelation in the residuals.
In summary, the regression model in question shows a strong overall relationship (R = 0.800)
between the predictor variables and the dependent variable, with the predictor variables
explaining approximately 63.9% of the variance in ROA. The adjusted R Square value of 0.621
indicates that the model accounts for 62.1% of the variability, considering the complexity of the
model. The standard error of the estimate provides an average measure of the prediction error,
while the Durbin-Watson statistic suggests the presence of some positive autocorrelation in the
residuals.
Model Sum of Squares df Mean Square F Sig.
The ANOVA table presented here provides information about the analysis of variance for the
regression model. It helps assess the overall significance of the regression model and the
individual contributions of the predictor variables. Let's discuss each component of the ANOVA
table:
1. Regression: This row represents the sum of squares, degrees of freedom (df), mean square,
F statistic, and significance level for the regression portion of the model.
2. Sum of Squares: The sum of squares for the regression is 28.049. It measures the total
variation explained by the regression model.
3. Degrees of Freedom (df): The regression has 5 degrees of freedom, which corresponds to
the number of predictor variables in the model.
4. Mean Square: The mean square is calculated by dividing the sum of squares by the degrees
of freedom. In this case, the mean square is 5.610.
5. F statistic: The F statistic is a ratio that compares the variability explained by the regression
model to the unexplained variability. Here, the F statistic is 35.123.
6. Significance (Sig.): The significance level, denoted as Sig., indicates the probability of
obtaining the observed F statistic by chance alone. In this case, the significance level
is .000, which is less than the conventional threshold of .05. It suggests that the regression
model is statistically significant, meaning that there is strong evidence that the predictor
variables collectively contribute to explaining the variance in the dependent variable.
7. Residual: This row represents the sum of squares, degrees of freedom, and mean square for
the residuals, which are the unexplained portion of the dependent variable.
8. Sum of Squares: The sum of squares for the residuals is 15.812, indicating the unexplained
variability in the dependent variable after accounting for the predictor variables.
9. Degrees of Freedom (df): The residuals have 99 degrees of freedom, which is calculated by
subtracting the number of predictor variables from the total sample size.
10. Mean Square: The mean square for the residuals is calculated by dividing the sum of
squares by the degrees of freedom. In this case, the mean square is .160.
11. Total: This row provides information about the total sum of squares, which represents the
total variability in the dependent variable.
Sum of Squares: The total sum of squares is 43.861, representing the total variability in the
dependent variable.
Dependent Variable: The ANOVA table specifies that the dependent variable in this analysis is
"ROA" (Return on Assets).
Predictors: The predictors listed in this table include a constant term and the variables "DEM,"
"IT," "LEAN," "ABC," and "ITO."
In summary, the ANOVA table indicates that the regression model is statistically significant (p
< .05), meaning that the predictor variables as a whole contribute significantly to explaining the
variability in the dependent variable. The F statistic of 35.123 provides evidence for this
significance. The sum of squares and mean square values help assess the proportion of
variability explained by the regression model and the unexplained residual variability,
respectively.
The coefficients table provides information about the unstandardized and standardized
coefficients, t-values, significance levels, and collinearity statistics for each predictor variable
in the regression model. Let's discuss each column in detail:
1. Model: This column indicates the model number or identifier.
2. Unstandardized Coefficients (B): The unstandardized coefficients represent the
estimated effect or contribution of each predictor variable on the dependent variable
(ROA), holding other variables constant.
Constant: The constant term in the regression model is 0.560. It represents the estimated
value of the dependent variable when all predictor variables are zero.
IT: The unstandardized coefficient for the variable "IT" is 0.215. It suggests that a one-
unit increase in the IT variable is associated with an estimated increase of 0.215 units in
the dependent variable, ROA.
ABC: The unstandardized coefficient for "ABC" is 0.299. It indicates that a one-unit
increase in the ABC variable is associated with an estimated increase of 0.299 units in
ROA.
ITO: The unstandardized coefficient for "ITO" is 0.349. It suggests that a one-unit
increase in the ITO variable is associated with an estimated increase of 0.349 units in
ROA.
LEAN: The unstandardized coefficient for "LEAN" is -0.426. It indicates that a one-
unit increase in the LEAN variable is associated with an estimated decrease of 0.426
units in ROA.
DEM: The unstandardized coefficient for "DEM" is 0.319. It suggests that a one-unit
increase in the DEM variable is associated with an estimated increase of 0.319 units in
ROA.
3. Std. Error: The standard error represents the estimated standard deviation of the
coefficient estimate. It measures the precision or reliability of the coefficient estimate.
4. Standardized Coefficients: The standardized coefficients (Beta) represent the estimated
effect of each predictor variable on the dependent variable in standard deviation units. It
allows for a direct comparison of the relative importance of the predictor variables.
5. t-value: The t-value measures the significance of each coefficient estimate. It is
calculated by dividing the unstandardized coefficient by its standard error.
6. Sig. (Significance): The significance level (p-value) indicates the probability of
obtaining the observed t-value by chance alone. It helps determine whether the
coefficient is statistically significant.
7. Collinearity Statistics: These statistics assess the presence of multicollinearity, which is
a high correlation between predictor variables that can affect the reliability of
coefficient estimates.
Tolerance: Tolerance represents the proportion of variance in a predictor variable that is
not explained by other predictor variables. A tolerance value close to 1 indicates low
multicollinearity.
VIF (Variance Inflation Factor): VIF is the reciprocal of the tolerance and measures the
degree of multicollinearity. A VIF value greater than 1 suggests the presence of
multicollinearity, with higher values indicating higher collinearity.
In summary, the coefficients table provides information about the estimated effects,
significance, and collinearity statistics for each predictor variable in the regression model. It
allows us to assess the individual contributions and statistical significance of each predictor
variable in explaining the dependent variable, ROA
Based on the coefficients table provided, here is a summary of the findings for each predictor
variable in the regression model:
1. IT (Information Technology):
Unstandardized Coefficient (B): 0.215
Standardized Coefficient (Beta): 0.159
t-value: 2.551
Significance (p-value): 0.012
The variable "IT" has a positive coefficient of 0.215, indicating that an increase in the IT
variable is associated with a positive effect on the dependent variable (ROA). The standardized
coefficient (Beta) of 0.159 suggests that IT has a relatively smaller effect compared to other
predictors. The t-value of 2.551 is statistically significant at the 0.05 level (p = 0.012),
indicating a significant relationship between IT and ROA.
2. ABC (Activity-Based Costing):
Unstandardized Coefficient (B): 0.299
Standardized Coefficient (Beta): 0.163
t-value: 2.378
Significance (p-value): 0.019
The variable "ABC" has a positive coefficient of 0.299, indicating that an increase in the ABC
variable is associated with a positive effect on ROA. The standardized coefficient (Beta) of
0.163 suggests that ABC has a relatively smaller effect compared to other predictors. The t-
value of 2.378 is statistically significant at the 0.05 level (p = 0.019), indicating a significant
relationship between ABC and ROA.
3. ITO (Information Technology Outsourcing):
Unstandardized Coefficient (B): 0.349
Standardized Coefficient (Beta): 0.411
t-value: 5.038
Significance (p-value): 0.000
The variable "ITO" has a positive coefficient of 0.349, indicating that an increase in the ITO
variable is associated with a positive effect on ROA. The standardized coefficient (Beta) of
0.411 suggests that ITO has a relatively larger effect compared to other predictors. The t-value
of 5.038 is highly statistically significant (p < 0.001), indicating a strong relationship between
ITO and ROA.
4. LEAN (Lean Manufacturing):
Unstandardized Coefficient (B): -0.426
Standardized Coefficient (Beta): -0.428
t-value: -6.229
Significance (p-value): 0.000
The variable "LEAN" has a negative coefficient of -0.426, indicating that an increase in the
LEAN variable is associated with a decrease in ROA. The standardized coefficient (Beta) of -
0.428 suggests that LEAN has a relatively larger effect compared to other predictors. The t-
value of -6.229 is highly statistically significant (p < 0.001), indicating a strong relationship
between LEAN and ROA.
5. DEM (Demographics):
Unstandardized Coefficient (B): 0.319
Standardized Coefficient (Beta): 0.334
t-value: 4.215
Significance (p-value): 0.000
The variable "DEM" has a positive coefficient of 0.319, indicating that an increase in the DEM
variable is associated with a positive effect on ROA. The standardized coefficient (Beta) of
0.334 suggests that DEM has a relatively larger effect compared to other predictors. The t-value
of 4.215 is highly statistically significant (p < 0.001), indicating a strong relationship between
DEM and ROA.
Collinearity Statistics:
The collinearity statistics assess the presence of multicollinearity, which is the high correlation
between predictor variables.
Tolerance: The tolerance values range between 0 and 1, with values close to 1
indicating low multicollinearity. In this case, all predictor variables have tolerances
above 0.5, indicating no severe multicollinearity issues.
VIF (Variance Inflation Factor): VIF is the reciprocal of the tolerance and measures the
degree of multicollinearity. VIF values below 5 are generally considered acceptable. In
this case, all predictor variables have VIF values below 2, suggesting no significant
multicollinearity.
In summary, the coefficients table provides information about the estimated coefficients,
significance levels, and collinearity statistics for each predictor variable in the regression
model. It indicates that variables IT, ABC, ITO, LEAN, and DEM have significant
relationships with the dependent variable ROA. The standardized coefficients help compare the
relative importance of each predictor variable, and the collinearity statistics suggest no severe
multicollinearity issues.
WHAT IS THE FUNCTION OF T- VALUE HERE?
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The t-value, also known as the t-statistic, is a measure of the statistical significance of a
coefficient estimate in a regression model. It is calculated by dividing the estimated coefficient
(B) by its standard error.
The function of the t-value is to assess whether the coefficient estimate is statistically different
from zero. It allows us to determine whether there is a significant relationship between the
predictor variable and the dependent variable.
In hypothesis testing, the t-value is compared to a critical value from the t-distribution based on
the degrees of freedom and the desired level of significance (often 0.05). If the absolute value
of the t-value is greater than the critical value, it indicates that the coefficient estimate is
statistically significant at that significance level.
In other words, we can reject the null hypothesis that the coefficient is equal to zero and
conclude that there is evidence of a relationship between the predictor variable and the
dependent variable.
For example, in the coefficients table you provided, the t-values for the predictor variables IT,
ABC, ITO, LEAN, and DEM are 2.551, 2.378, 5.038, -6.229, and 4.215, respectively. These t-
values are compared to critical values from the t-distribution to assess their statistical
significance. The corresponding significance levels (p-values) are also reported, indicating the
probability of obtaining the observed t-value by chance alone.
In summary, the t-value helps determine the statistical significance of a coefficient estimate,
indicating whether there is evidence of a relationship between the predictor variable and the
dependent variable in the regression model
The F-statistic is used in regression analysis to test the overall significance of a regression
model. It assesses whether the regression model, as a whole, provides a better fit to the data
compared to a model with no predictors (i.e., the null model).
The F-statistic is calculated by comparing the variability explained by the regression model
(regression sum of squares) to the unexplained variability (residual sum of squares) in the data.
It is essentially a ratio of two mean squares:
F = (Explained Variability / Degrees of Freedom in Model) / (Unexplained Variability /
Degrees of Freedom Residual)
The function of the F-statistic is to determine whether the explained variability in the model is
significantly greater than the unexplained variability. In other words, it tests the null hypothesis
that all the regression coefficients in the model are equal to zero, indicating that the predictors
have no effect on the dependent variable.
If the F-statistic is large and the associated p-value is small (below a predetermined
significance level, often 0.05), it suggests that the regression model significantly improves the
fit to the data compared to the null model. This means that at least one of the predictor
variables in the model has a significant effect on the dependent variable.
The F-statistic is particularly useful for determining the overall significance of the model and
deciding whether to reject the null hypothesis of no relationship between the predictors and the
dependent variable. However, it does not provide information about the individual significance
of each predictor variable. For that, we rely on the t-values and associated p-values for each
coefficient estimate.
In summary, the F-statistic helps assess the overall significance of the regression model by
comparing the explained and unexplained variability in the data. It helps determine whether the
predictors collectively have a significant effect on the dependent variable.
