IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v71y1989i3p527-32.html
   My bibliography  Save this article

The Duration of the Adjustment Process of Financial Ratios*

* This paper has been replicated

Author

Listed:
  • Peles, Yoram C
  • Schneller, Meir I

Abstract

Are financial ratios an observed quantity that is influenced by firms or capital and product markets? The current body of empirical research concentrates on the time series behavior of such ratios when corporate distress is revealed. In this study the time series properties of joint-concern firms is examined. It is shown that for six financial ratios under examination, the data are consistent with partial adjustment process with finite adjustment durations. These durations are estimated through a methodology that does not require an a priori knowledge of the level toward which ratios are adjusted. Furthermore, the order of the six discerned durations is consistent with common wisdom. Copyright 1989 by MIT Press.

Suggested Citation

  • Peles, Yoram C & Schneller, Meir I, 1989. "The Duration of the Adjustment Process of Financial Ratios," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 527-532, August.
  • Handle: RePEc:tpr:restat:v:71:y:1989:i:3:p:527-32
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0034-6535%28198908%2971%3A3%3C527%3ATDOTAP%3E2.0.CO%3B2-R&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dina Korent, 2021. "Target adjustment model and new working capital management performance measure: Evidence from Croatia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 39(1), pages 135-162.
    2. Ala’a Adden Abuhommous & Tareq Mashoka, 2018. "A dynamic approach to accounts receivable: the case of Jordanian firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 171-191, June.
    3. MCarmen Martínez†Victoria & Narciso Arcas Lario & Mariluz Maté Sánchez Val, 2018. "Financial behavior of cooperatives and investor†owned firms: An empirical analysis of the Spanish fruit and vegetable sector," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 456-471, March.
    4. Mate-Sanchez, Mariluz & López Hernández, Fernando A. & Lacambra, Jesus Mur, 2012. "Analyzing long-term average adjustment of financial ratios with spatial interactions," Economic Modelling, Elsevier, vol. 29(4), pages 1370-1376.
    5. Maté-Sánchez-Val, Mariluz & López-Hernandez, Fernando & Mur-Lacambra, Jesús, 2017. "How do neighboring peer companies influence SMEs’ financial behavior?," Economic Modelling, Elsevier, vol. 63(C), pages 104-114.
    6. Gallizo, Jose L. & Salvador, Manuel, 2003. "Understanding the behavior of financial ratios: the adjustment process," Journal of Economics and Business, Elsevier, vol. 55(3), pages 267-283.
    7. RAMON-DANGLA, Remedios & YAÑEZ-MUÑOZ, Leonardo, 2018. "How The Public Spending On Defense Can Affect Business Survival? The Case Of Shipbuilding In Spain," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 18(2), pages 71-86.
    8. Jose Luis Gallizo & Pilar Gargallo & Manuel Salvador, 2008. "Multivariate partial adjustment of financial ratios: a Bayesian hierarchical approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(1), pages 43-64.
    9. Jozef Konings & Hylke Vandenbussche, 2004. "The adjustment of financial ratios in the presence of soft budget constraints: evidence from Bulgaria," European Accounting Review, Taylor & Francis Journals, vol. 13(1), pages 131-159.

    Replication

    This item has been replicated by:
  • Davis, Harry Zvi & Peles, Yoram C, 1992. "The Duration of the Adjustment Process of Financial Ratios: Further Remarks," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 557-559, August.
  • More about this item

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. The Duration of the Adjustment Process of Financial Ratios (REStat 1989) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:71:y:1989:i:3:p:527-32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.