On the distributional properties of financial ratios in annual reports of Greek listed companies

Anastasia G. Maggina

International Journal of Managerial and Financial Accounting, 2008, vol. 1, issue 2, 166-183

Abstract: Financial ratios drawn from annual financial reports have been used extensively in prior research for various purposes (corporate predictions, acquisitions, liquidations, rating decisions, etc). In this study financial ratios (profitability, liquidity and long-term solvency) have been used in an effort to investigate the distributional properties of financial ratios. Distributions presented in both theory and practice such as Cauchy, chi-square, Erlang, exponential, extreme value, Gamma, Laplace, logistic, lognormal, Student t, triangular, uniform and Weibull have been tested in this study. Panel data (even after outliers excluded or after transformation) of financial ratios for the time period 1974-2006 for Greek listed companies indicate that none of the financial ratios selected in this study follows a normal distribution. The value of test statistic (Kolmogorov-Smirnov) is relatively large and the p-value of the test is lower than 1%. This is merely inconsistent with the literature. According to prior studies WCTA (working capital to total assets), QATA (quick assets to total assets) and DTA (debt to total assets) were always normally distributed.

Keywords: financial ratios; distribution properties; annual reports; Greek listed companies; Greece; financial reports; profitability; liquidity; long-term solvency. (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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