Seeking Parsimony
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. 12
Keywords:
financial distress, bankruptcy, canonical correlation analysis, law of
parsimony, variable deletion strategy
