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Dimensional Analysis and the Interpretation of Regression Coefficients

Published online by Cambridge University Press:  19 October 2009

Craig G. Johnson
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Extract

One of the most vexing areas of business finance is empirical validation of theory. Many problems arise that the investigator cannot avoid. The purpose of this paper is to define a class of problems that can be avoided but that have caused many previous investigators difficulty, even though they may not have realized it. In what follows, the concept of dimensional analysis, borrowed from the physical sciences, is introduced. Then dimensional analysis is extended to the interpretation of estimated regression coefficients.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 7 , Issue 1 , January 1972 , pp. 1399 - 1406
Copyright
Copyright © School of Business Administration, University of Washington 1972

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