Financial Ratio Cross‐section Dynamics: a Non‐parametric Approach

Jozef Konings

Journal of Business Finance & Accounting, 1997, vol. 24, issue 9‐10, 1331-1342

Abstract: This study introduces a non‐parametric approach to study the cross‐sectional dynamic behaviour of financial ratios and to test their convergence. A non‐parametric Markov transition matrix approach is used to consider the evolution of the entire cross‐section distribution. Conclusions with respect to the convergence of financial ratios are derived from the ergodic distributions. The results demonstrate high intra‐distribution mobility with more persistence in the smallest and the largest size classes. Furthermore we find no convergence towards the industry average.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:24:y:1997:i:9-10:p:1331-1342

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