8-1.

A study was undertaken to assess the impact of the consolidation of the "Big 4" accounting firms.1 The article reports a finding of "increased equality among Big 4 auditors at both the national industry level and at the city industry level." It reported that consolidation led to equality of auditor market share. Suppose the data included information on more than 4 firms, and were reported as follows for both before (B) and after (A) the consolidation, in terms of auditor involvement scores:

Firm number

1 2 3 4 5 6 7 8 9 10 11 12

B: 5 7 1 2 4 3 2 7 1 2 7 5

A: 8 9 3 2 4 3 8 7 5 3 4 6

a. Just by looking at the data, what can you surmise about firms' responses to consolidation.

b. Frame your question as a statistical test.

c. What are the assumptions you will need to use?

d. Decide whether this is a one-tailed or two-tailed test and choose your level of significance. e. Carry out the test and state your conclusions in a paragraph explaining what you have found about the effects of consolidation on auditor involvement.