Binary Response and Logistic Regression in Recent Accounting Research Publications: A Methodological Note

Posted: 26 Jan 2006 Last revised: 26 Apr 2009

See all articles by Wenxia Ge

Wenxia Ge

University of Ottawa

G. A. Whitmore

McGill University

Multiple version iconThere are 2 versions of this paper

Date Written: October 17, 2005

Abstract

In this research note, we review 35 recent articles in leading accounting journals that performed a logistic regression or a standard linear regression analysis based on OLS for a binary dependent variable. Our review shows that many of these articles have ambiguities and even outright errors in the presentation of the binary regression model. We discuss why various presentations of the model are incorrect. We also remind readers of the weaknesses of using ordinary linear regression for a binary response variable. We explain that incorrect presentations of the model, even in conjunction with a correct analysis, may lead to a serious misinterpretation of research findings by authors and readers alike. Two articles are critiqued to demonstrate the reporting problems. We close our note with comments on some alternative approaches for the analysis of binary response data. Our note is a call for an improvement in model presentation and related statistical analysis in the accounting field.

Keywords: binary variable, logistic regression, standard linear regression, accounting research

JEL Classification: M40, C10, C25

Suggested Citation

Ge, Wenxia and Whitmore, G. A., Binary Response and Logistic Regression in Recent Accounting Research Publications: A Methodological Note (October 17, 2005). Available at SSRN: https://ssrn.com/abstract=878211

Wenxia Ge (Contact Author)

University of Ottawa ( email )

55 Laurier Avenue East
Ottawa, Ontario K1N 6N5
Canada

G. A. Whitmore

McGill University ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A 1G5
Canada
514-398-4049 (Phone)
514-398-3876 (Fax)

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