Compute the return on equity (ROE) for a sample of 20 banks for the year beforehand the Sarbanes-Oxley Act was enacted. For the similar sample of banks, compute the ROE for the year following the enactment of the Sarbanes-Oxley Act.
Then, answer the subsequent questions
Was the average bank's ROE lower successive the enactment of the Sarbanes-Oxley Act than before the act? If so why do you think that was the case?
What's the null hypothesis for this hypothesis test? What's the alternative premise for this hypothesis test?
Choose at least three different important levels to conduct the hypothesis test. Is it likely that a Type I error occurred with the hypothesis test? Why or why not?
Is it possible that a Type II error occurred? Why or why not?