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Exploratory Modelling of Financial Reporting and Analysis Practices in Small Growth Enterprises

Author

Listed:
  • Richard G. P. McMahon

    (Flinders University South Australia)

  • Leslie G. Davies

    (Bodo Graduate School of Business)

  • Nicholas M. Bluhm

    (Flinders University South Australia)

Abstract

This paper reports an exploratory study of statistical modelling of historical financial reporting and analysis in a sample of small growth enterprises. The study sought to identify those factors that determine whether particular financial reporting and analysis practices are undertaken, and to represent these explanatory factors in expressions that reflect their relative and combined influence. Dichotomous logistic regression is employed to model financial analysis and polytomous logistic regression is used to model financial reporting. The models developed seem moderately encouraging in terms of the statistical significance and predictive ability. The overall classification success for financial analysis is a modest 65 percent; but identifying users of financial ratio analysis is achieved with just below 90 percent accuracy. The overall classification success for a trichotomous financial reporting scale exceeds 70 percent; with anticipation of financial reporting at the highest level being as accurate as 90 percent. External validation of the models remains an important priority.

Suggested Citation

  • Richard G. P. McMahon & Leslie G. Davies & Nicholas M. Bluhm, 1994. "Exploratory Modelling of Financial Reporting and Analysis Practices in Small Growth Enterprises," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 3(3), pages 199-214, Fall.
  • Handle: RePEc:pep:journl:v:3:y:1994:i:3:p:199-214
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    References listed on IDEAS

    as
    1. J. William Petty, 1991. "Research in Small-Firm Entrepreneurial Finance: A Note on Developing a Paradigm," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(1), pages 88-90, Spring.
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    More about this item

    Keywords

    Financial Reporting; Small Growth; Low Growth;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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