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An extended multinomial†Dirichlet model for error bounds for dollar†unit sampling

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  • ELLA MAE MATSUMURA
  • KAM†WAH TSUI
  • WING†KEUNG WONG

Abstract

. This paper describes an extension of the Tsui, Matsumura, and Tsui (1985) procedure, which is based on a multinomial distribution model within the dollar†unit sampling framework, with a Dirichlet prior distribution. The extended model and a different Dirichlet prior are used in this study to generate upper and lower bounds and two†sided confidence intervals for situations in which both understatement and overstatement errors are possible. The reported simulation study indicates that the achieved confidence levels of the proposed estimates are usually close to or greater than the nominal levels in repeated sampling for the populations studied. Résumé. Les auteurs décrivent une extension du procédé de Tsui, Matsumura et Tsui (1985) basée sur un modèle de distribution multinômiale dans le contexte de l'échantillonnage en unités monétaires, avec une distribution a priori de Dirichlet. Les auteurs utilisent l'extension du modèle et une distribution a priori de Dirichlet différente pour obtenir des limites supérieures et inférieures, et des intervalles de confiance bilatéraux pour les cas où des erreurs de sous†évaluation aussi bien que de surévaluation sont envisageables. L'étude de simulation qui fait l'objet du compte rendu montre que les niveaux de confiance obtenus relativement aux estimations proposées se rapprochent habituellement des valeurs nominales où les excèdent lorsqu'on procède à des échantillonnages répétés des populations à l'étude.

Suggested Citation

  • Ella Mae Matsumura & Kam†Wah Tsui & Wing†Keung Wong, 1990. "An extended multinomial†Dirichlet model for error bounds for dollar†unit sampling," Contemporary Accounting Research, John Wiley & Sons, vol. 6(2), pages 485-500, March.
    • Handle: RePEc:wly:coacre:v:6:y:1990:i:2:p:485-500
    DOI: 10.1111/j.1911-3846.1990.tb00770.x
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    References listed on IDEAS

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    1. Godfrey, J & Neter, J, 1984. "Bayesian Bounds For Monetary Unit Sampling In Accounting And Auditing," Journal of Accounting Research, Wiley Blackwell, vol. 22(2), pages 497-525.
    2. Robert Plante & John Neter & Robert A. Leitch, 1984. "A Lower Multinomial Bound for the Total Overstatement Error in Accounting Populations," Management Science, INFORMS, vol. 30(1), pages 37-50, January.
    3. John Neter & James Godfrey, 1985. "Robust Bayesian Bounds for Monetary‐Unit Sampling in Auditing," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 34(2), pages 157-168, June.
    4. Menzefricke, U & Smieliauskas, W, 1984. "A Simulation Study Of The Performance Of Parametric Dollar Unit Sampling Statistical Procedures," Journal of Accounting Research, Wiley Blackwell, vol. 22(2), pages 588-604.
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    Cited by:

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    5. Chang, C-L. & McAleer, M.J. & Wong, W.-K., 2018. "Decision Sciences, Economics, Finance, Business, Computing, and Big Data: Connections," Econometric Institute Research Papers 18-024/III, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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    8. Ranko Jelic & Richard Briston & Chris Mallin, 1999. "Gambling Banks and Firm Financing in Transition Economies," Multinational Finance Journal, Multinational Finance Journal, vol. 3(4), pages 253-282, December.

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