The problem with accounting partial identities
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Universidad Politécnica de Cartagena
info
Argitaletxea: Asociación Española de Contabilidad y Administración de Empresas
ISBN: 978-84-16286-48-5
Argitalpen urtea: 2018
Orrialdeak: 15
Mota: Biltzar ekarpena
Laburpena
This experiment uses a Monte Carlo simulation designed to test theproblems about the use of accounting identities are present in the model ofFazzari, Hubbard, and Petersen (1988). The Monte Carlo simulationcreates sets of randomly generated cash flows, Tobin’s Q, error termvariables and investments variables that are made dependent on the formerones. The investments and cash flow variables are also related through apartial accounting identity. OLS estimations using investments as thedependent variable and cash flows and Tobin’s Q as independent variablesverify that estimated coefficients do not represent reality. The closer thedata are to the accounting identity, the less the regression will tell about thecausal relation.