Page 96 - CITN 2017 Journal

Jarque-Bera test value of the above mentioned explanatory variables shows that the
equation is normal with the p-values significant at 1% level (p< 0.01) indicating that all
variables are individually significant in the equation. Still on the explanatory variables,
Size (SIZE) and Net Working Capital (NWC) had mean value of 15.4437 and -0.4324
with standard deviation of 3.075 and 0.6675 respectively. Their Kurtosis Value
indicated while their skewness values showed their distribution is negatively left
skewed.

Testing for Multicollinearity
This study employed the correlation coefficient at a significant level of P<.01, .05 and .1 to
determine the reaction of the variables to each other. The results as shown in Table 2
showed that the explanatory variables were not correlated as all the coefficient of the
correlation among explanatory variables are between 0.000 and 0.18 which showed that
there is no problem of multicollinearity in the estimation. This assertion was based on the
recommendation of Bryman and Cramer (1997) that correlation between two independent
variables should not exceed 0.8 and Tabachnick and Fidell (2001) postulates a maximum
of 0.7 as the highest tolerance level of non-multicollinearity between a pair of variables.

Table 3: Correlation Analysis of the Variables
Covariance Analysis: Ordinary
Sample (adjusted): 2005 2014
Included observations: 500 after adjustments
Balanced sample (listwise missing value deletion)
Correlation
TOBIN TOBIN ETR LEV ROA SIZE2 LIQ NWC MTB CIN
Q Q(-1)
TOBIN 1.0000
Q -----
TOBIN 0.7763 1.0000
Q(-1) 0.0000 -----
0.0828 0.0424 1.0000
ETR
0.0641 0.3432 -----
0.0707 0.0707 -0.040 1.0000
LEV
0.1139 0.1143 0.3657 -----
0.4011 0.3550 0.2756 -0.1497 1.0000
ROA
0.0000 0.0000 0.0000 0.0008 -----
0.2283 0.2277 0.1530 0.1078 0.2415 1.0000
SIZE
0.0000 0.0000 0.0006 0.0158 0.0000 -----
0.5279 0.4537 0.2626 -0.0843 0.7447 0.2037 1.000
LIQ 0
0.0000 0.0000 0.0000 0.0593 0.0000 0.0000 -----
0.0871 0.1252 0.0136 -0.0907 0.4613 -0.0257 0.273 1.000
4 0
NWC
0.0515 0.0050 0.7613 0.0425 0.0000 0.5651 0.000 -----
0
0.9224 0.7245 0.0705 0.0731 0.4407 0.2502 0.531 0.109 1.000
0 4
MTB
0.0000 0.0000 0.1154 0.1024 0.0000 0.0000 0.000 0.014 -----
0 4
0.0596 0.0399 -0.037 0.3096 -0.042 0.2737 -0.015 -0.259 0.097 1.000
0.1831 0.3730 0.4049 0.0000 0.3448 0.0000 0.734 0.000 0.029 -----
CIN 4 0
Source: Authors' Computation, 2015
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