14.34 A study compared firms with and without an audit committee. For samples of firms of each type, the extent of directors’ ownership was measured using the number of shares owned by the board as a proportion of the total number of shares issued. In the sample, directors’ ownership was, overall, higher for firms without an audit committee. To test for statistical significance, the Mann-Whitney U statistic was calculated.

It follows that 1U - mU2>sU was found to be 2.12. What can we conclude from this result?

14.35 At the beginning of the year, a stock market analyst produced a list of stocks to buy and another list of stocks to sell. For a random sample of 12 stocks from the buy list, percentage returns over the year were as follows:

2.8 4.7 1.2 3.2 4.8 1.4 2.1 3.0 1.7 3.3 3.1 3.4 For an independent random sample of 12 stocks from the sell list, percentage returns over the year were as follows:

9.2 7.0 5.0 5.4 3.6 10.0 5.2 7.4 9.8 4.4 8.2 2.2 Use the Mann-Whitney test to interpret these data at the 5% level.