Assumptions of Multiple Regression Analysis

Following are the assumptions of multiple regression analysis:

Independence of observation
Independence of observation assumption implies that there should not exist any
relationship between the responses of any respondent with that of another respondent (Leech,
Barret & Morgan, 2005). Durbin-Watson test is used to test the check the presence of any serial
correlation among the residuals of the observations. Durbin-Watson test statistics for the
regression test of this study is 2.11. The values range from 0 to 4 however optimally it should be
between 1.5 and 2.5.
Normal Distribution of Data
The assumption of normal distribution of data implies that when the data is plotted; it is
symmetrically dispersed around the mean value of the data. The data for this study was normally
distributed as shown in the histogram graphs for normal distribution. The graphs show a normal
distribution in the bell curve for skewness and kurtosis. Morgan et al. (2001) stated that the
skewness and kurtosis statistics can be interpreted as symmetrical as long as they are between the
values of +1 and -1.

Figure 2. Histogram chart for the Personality variable.

Hair et al. (2006) stated that the Q-Q plot also determines the normality of data. If the
data plotted is along the normal line then the data is considered as normal.

Figure 6. Normal Q-Q plot

Outliers
The assumption of outliers suggests that there should not be a unique or distinct response
from the rest of the data. It usually exists when there is one value on either of the extreme sides
of the x-axis and deviates from the other values of the sample (F ield, 2005). This can be detected
by the z-score using SPSS (Brace, Kemp & Snelgar, 2006) and it should not go beyond the limit
of +2.5 and -2.5 (p<0.05, two tailed).
Linearity of Data
The linearity of data assumes that there exists a linear relationship between all the
dependent and independent variables. It means that when the variables are plotted in a scatter
plot diagram, there should be a linear relationship between them (Hair, et al., 2006; Tabachnick
& Fidell, 2001).

Figure 10. Scatter plot diagram for the variables

In addition, the scatter plot matrix can also be used to visually represent the relationship of
variables that is shown in the figure 11.

Figure 11. Scatterplot Matrix for the Variables

Homoscedasticity
Homoscedasticity is assumes that the variance of all the dependent variables is somewhat
equal with all the independent variables. The scatter plot of the residuals of the regression

analysis also shows the homogeneity of variances as long as they are equally spread along the
zero line.

Figure 12. Scatter plot graph of the Regression Residuals

Mulitcollinearity and Singularity
The assumption of multicollinearity and singularity tends to be violated, if there is found
a very high correlation among the independent variables in the correlation matrix. If the
correlation is very high (i.e. 0.90 or above) there exists the problem of multicollinearity however,
the problem of singularity is found if there is a perfect correlation among different variables of
the study. In this study, there is not found any problem of mulitcollinearity or singularity as all
the correlation values are less than 0.90 (see table 7). However, multicollinearity can be checked
by the tolerance value and variance inflation factor (VIF) obtained from collinearity matrix. Field
(2005) discussed that the tolerance value should be greater than 0.20 and VIF value sho uld be
less than 4 in order to avoid the problems of multicollinearity and singularity. The tolerance
values and VIF values for the variables of this study are shown in table 20. It shows that the
values of the collinearity statistics suffice the assumptio n of multicolinearity and singularity.