Estimating Models with Binary Dependent Variables: Some Theoretical and Empirical Observations

17 Pages Posted: 26 Apr 2014

See all articles by Guy Gessner

Guy Gessner

Canisius College

Wagner A. Kamakura

Rice University

Naresh K. Malhotra

Georgia Institute of Technology - Scheller College of Business

Mark Zmijewski

University of Chicago - Accounting

Date Written: 1988

Abstract

Many mathematically similar models are being used by business researchers to link binary dependent variables with a set of predictor variables. Typical research results indicate little difference between models in their ability to properly classify observations.

But, there appear to be major differences in the interpretation of coefficients resulting from the calibration of these competing models.

The empirical results in this article clearly show that when the assumptions underlying binary-dependent-variable techniques are violated, parameter estimates may be misleading. This can be true even when the goodness-of-fit statistics are not substantially affected.

Suggested Citation

Gessner, Guy and Kamakura, Wagner A. and Malhotra, Naresh K. and Zmijewski, Mark, Estimating Models with Binary Dependent Variables: Some Theoretical and Empirical Observations (1988). Journal of Business Research, Vol. 16, No. 1, 1988. Available at SSRN: https://ssrn.com/abstract=2428876

Guy Gessner

Canisius College ( email )

United States

Wagner A. Kamakura

Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
(713) 348-6307 (Phone)

Naresh K. Malhotra (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States

Mark Zmijewski

University of Chicago - Accounting ( email )

1101 East 58th Street
Chicago, IL 60637-1561
United States

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