Presents evidence on the cross-sectional multivariate distribution properties of financial ratios for manufacturing companies. Multivariate outlier detection and transformation methods that can be used to approximate multivariate normality; Analysis of financial ratio data.

[Accounting research that uses financial ratio data often assumes that sets of ratios have multivariate normal distributions. Multivariate distributional properties, multivariate outliers, and modified power transformations were examined to determine whether multivariate normality could be approximated for cross-sectional samples of financial ratios. The results were that the joint distribution of the financial ratios differed appreciably from multivariate normality and the financial ratio data contained multivariate outliers. Approximate multivariate normality was obtained by deleting multivariate outliers and applying modified power transformations to the ratios. Consequently, it would be possible to use multivariate outlier detection and transformation methods in accounting research to enhance statistical conclusion validity and to improve the effectiveness of decision models when multivariate methods that assume normality are used with financial ratios.]

Judgment accuracy, Multidimensional Graphics, Human information Processing, Presentation of information

Commercial banks have been the subjects of a large body of empirical research employing regression and econometric models and discriminant analysis. The purpose of this paper is to empirically identify and describe relationships, including hedging behavior, between the asset side and the liability/capital side of the balance sheets of a cross-section of large U.S. banks. Canonical correlation analysis is the statistical technique that is employed. Unlike regression analysis which explains the behavior of a single dependent variable as a function of a set of independent variables, canonical correlation analysis relates two sets of variables. In the present case, one set of variables is the composition of the lefthand side of the balance sheet and the other set is the right-hand side. The variables used in this study are asset and liability/capital categories expressed as a proportion of total bank assets (i.e., a percentage breakdown of the balance sheet or a common size statement). These proportions are used in lieu of the more usual financial ratios and no information exogenous to the bank is employed.