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THE APPLICATION OF ANALYSIS OF VARIANCE TO INTER‐FIRM COMPARISON RATIOS
Author(s) -
Lawrence S.R.
Publication year - 1982
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.1982.tb01013.x
Subject(s) - variance (accounting) , variation (astronomy) , econometrics , performance appraisal , business , computer science , accounting , economics , management , astrophysics , physics
There is a lack of consensus about the utility and validity of information provided through firms participating in an Interfirm Comparison (IFC). The disagreement is a result of different notions about the purpose served by IFC schemes. The unresolved question is how to use the same information for two purposes ‐ the appraisal of operating efficiency and the guidance of longer‐term planning decisions. The application of analysis of variance to the results of an IFC helps to clarify the nature, and improve the utility, of the comparative data by identifying factors accounting for variation in performance among firms grouped by multiple characteristics.