In 1993, the Financial Accounting Standards Board (FASB) was considering a proposal to require companies to report the potential effect of employees’ stock options on earnings per share (EPS). A random sample of 41 high-technology fi rms revealed that the new proposal would reduce EPS by an average of 13.8 percent, with a standard deviation of 18.9 percent. A random sample of 35 producers of consumer goods showed that the proposal would reduce EPS by 9.1 percent on average, with a standard deviation of 8.7 percent. On the basis of these samples, is it reasonable to conclude (at α = 0.10) that the FASB proposal will cause a greater reduction in EPS for high-technology fi rms than for producers of consumer goods?
Contact us for the solution
