Big Data Analytics
SUMMATIVE ASSIGNMENT
Introduction
In the past decade, executive compensation has become a contentious issue,
particularly in light of recent financial crises and debates over excessive remuneration packages. Critics have pointed out that some executives have received disproportionately high compensation, even when corporate performance and stock prices have been on the decline. Effective corporate governance mechanisms are crucial in influencing the level of executive compensation. The board of directors, and more specifically the remuneration committee, plays a vital role in determining both the amount and the structure of these compensation packages
Data Sets
For this assignment, you are provided with a dataset titled Determinants of Remuneration Data Set. This dataset will serve as the foundation for both your descriptive and predictive analytics.
Descriptive Analytics
You are required to conduct a thorough descriptive analysis of all variables in the dataset. The analysis should cover key statistical measures, including:
• Mean
• Standard deviation
• Range
• Skewness
• Kurtosis
In addition, you should visualise the trends over the three years covered in the data. You can employ various graphical techniques to present these trends. Tools like Tableau can be useful for generating heat maps and other visualisations to support your analysis.
Diagnostic Analytics
You are required to conduct a thorough diagnostic analysis using the two types of correlation models, briefly discuss which model is the most appropriate and why, and comment on multicollinearity.
Predictive Analytics
Using panel data regressions, you are required to develop and analyse two models. For each model, firstly, you need to conduct OLS to comment on multicollinearity, Secondly, determine whether to use fixed effects or random effects as the main test, while employing the Hausman test to choose between them and conduct sensitivity analysis. Additionally, you will need to evaluate the models’ sufficiency and strength by using appropriate statistical measures and discussing the significance of the relationships between dependent and independent variables.
Model 1:
Total calculated compensation
= Y0 + Y1 Board size + Y2 Board External Members
+ Y3 cEO & chairDuality + Y4 Remuneration committee size
+ Y5 Remuneration committee Number of Meetings
+ Y6 Duality of chairman of the Remuneration committe & chairman of the board
+ Y7 chairman compensation + Y8Total Members compensation + εit
Model 2:
Total Annual cash compensation
= Y0 + Y1 Board size + Y2 Board External Members + Y3 cEO & chair Duality + Y4
Remuneration committee size
+ Y5 Remuneration committee Number of Meetings
+ Y6 Duality of chairman of the Remuneration committe & chairman of the Board
+ Y7 chairman compensation + Y8Total Members compensation + εit
Additional Instructions
• STATA must be used for all statistical analysis, unless otherwise specified.
• You are required to include screenshots of STATA outputs in your appendices.
• Ensure that any Tableau visualizations you create are effectively integrated with and discussed alongside the results obtained from your STATA analysis.
• Make sure to reference appropriate academic literature or reports to support your findings and interpretations.