Seeking
Seeking Parsimony in Bankruptcy Studies Using Redundancy Analysis
Zahra Poorzamani1, Azita Jahanshad2
Department of Accounting, Assistant Professor, Central Tehran Banch, Islamic Azad University, Tehran, Iran,
E- mail: [email protected]
Department of Accounting, Assistant Professor, Central Tehran Banch, Islamic Azad University, Tehran, Iran
E- mail: [email protected]
Abstract: Despite the long-standing criticism directed towards variable selection in financial distress studies, no research has so far examined the relationship between alternative variable sets used in such studies. Therefore, the main purpose of the present study is to employ canonical correlation analysis in order to examine the relationships that exist between variable sets employed in four bankruptcy studies and then to illustrate the value of applying the law of parsimony to canonical correlation analysis solutions. The primary purpose of parsimony is that the more parsimonious the solution is, the more replicable the model will be. In this study the goal was achieved by removing the three variables in variable sets employed in selected bankruptcy studies.
[Zahra Poorzamani, Azita Jahanshad. Seeking Parsimony in Bankruptcy Studies Using Redundancy Analysis. Life Sci J2013;10(7s):70-78] (ISSN:1097-8135). http://www.lifesciencesite.com. 1
Keywords: financial distress, bankruptcy, canonical correlation analysis, law of parsimony, variable deletion strategy
