 Adjusting financial ratios: a Bayesian analysis of the Spanish manufacturing sectorJose Gallizo, Fernando Jiménez and Manuel Salvador Omega, 2002, vol. 30, issue 3, 185-195 Abstract: In this paper, we propose a Bayesian hierarchical model based on the partial adjustment model described by Wu and Ho (Rev. Quant. Finance Acc. 9 (1997) 71). The proposed model allows us to estimate the average adjustment coefficients associated with the error correction component and with the sensitivity of the firm to exogenous factors that have an industry-wide effect. Using the proposed model, we analyse the financial ratios calculated by The Bank of Spain's Central Balance Sheet Office (CBSO) corresponding to the Spanish manufacturing sector during the period 1986-1997. In almost all the ratios analysed, we find that the error correction component exerts a greater influence, with the Interest Expense to Liabilities ratio demonstrating a greater sensitivity to this effect; by contrast, factors endogenous to the firm have more influence over the Indebtedness ratio. When considered by sectors, we find that it is the Transport sector which enjoys the greatest capacity for manoeuvre in the Profitability and Indebtedness ratios. Keywords: Financial; ratios; Partial; adjustment; Bayesian; inference; Gibbs; sampling; Hierarchical; models (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:30:y:2002:i:3:p:185-195 Ordering information: This journal article can be ordered from Access Statistics for this article Omega is currently edited by B. Lev More articles in Omega from Elsevier |
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