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

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  • Anastasia G. Maggina

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.

Suggested Citation

  • Anastasia G. Maggina, 2008. "On the distributional properties of financial ratios in annual reports of Greek listed companies," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 1(2), pages 166-183.
    • Handle: RePEc:ids:injmfa:v:1:y:2008:i:2:p:166-183
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    References listed on IDEAS

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    1. Ron Bird & A J McHugh, 1977. "Financial Ratios - An Empirical Study," Published Paper Series 1977-1, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    2. Lee, Cwj, 1985. "Stochastic Properties Of Cross-Sectional Financial Data," Journal of Accounting Research, Wiley Blackwell, vol. 23(1), pages 213-227.
    3. Martikainen, Teppo & Perttunen, Jukka & Yli-Olli, Paavo & Gunasekaran, A., 1995. "Financial ratio distribution irregularities: Implications for ratio classification," European Journal of Operational Research, Elsevier, vol. 80(1), pages 34-44, January.
    4. Martikainen, Teppo, 1992. "Time-series distributional properties of financial ratios: Empirical evidence from Finnish listed firms," European Journal of Operational Research, Elsevier, vol. 58(3), pages 344-355, May.
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    Cited by:

    1. Arber H. Hoti & Hysen Ismajli & Skender Ahmeti & Arben Dermaku, 2012. "Effects of Audit Opinion on Stock Prices: The case of Croatia and Slovenia," EuroEconomica, Danubius University of Galati, issue 2(31), pages 75-87, May.

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