MULTIVARIATE NORMALITY AND A BOND RATING DECISION MODEL*

An assumption of multivariate normality for a decision model is validated in this paper. Measurements for the independent variables of a bond rating model were taken from a sample of municipal bonds. Three methods for examining both univariate and multivariate normality (including normal probability plots) are described and applied to the bond data. The results imply, after applying normalizing transformations to four of the variables, that the data reasonably approximate multivariate normality, thereby validating a distributional requirement of the discriminant-analysis-based decision model. The methods described in the paper may also be used by others interested in examining multivariate normality assumptions of decision models.     

A Comparison of Selected Artificial Neural Networks that Help Auditors Evaluate Client Financial Viability

This study compares the performance of three artificial neural network (ANN) approaches—backpropagalion, categorical learning, and probabilistic neural network—as classification tools to assist and support auditor's judgment about a client's continued financial viability into the future (going concern status). ANN performance is compared on the basis of overall error rates and estimated relative costs of misclassificaticn (incorrectly classifying an insolvent firm as solvent versus classifying a solvent firm as insolvent). When only the overall error rate is considered, the probabilistic neural network is the most reliable in classification, followed by backpropagation and categorical learning network. When the estimated relative costs of misclassification are considered, the categorical learning network is the least costly, followed by backpropagation and probabilistic neural network.     

区域金融协同发展风险防范与金融审计应对策略

随着地方金融改革的深入,金融创新持续推进,区域金融协同发展过程中,金融风险呈现集聚效应。区域性金融风险突发性强,传导速度快,局部机构的经营恶化极有可能导致区域性金融危机爆发。因此,现阶段亟需借助金融审计手段,发挥金融审计的预防、警示等作用,采用行之有效的措施,对金融风险进行有效识别、防范与化解,进而促进区域金融健康协同发展。     

Closer than ever: Growing business-level connections between Australia and Europe

Despite the growing presence of European firms in Australia and vice versa, studies of these business-level connections have been few and far between. Building on points made in our earlier macro-level analysis of Australian-European relations, this study examines business-to-business and business-to-consumer activity at the micro-level between the two continents.We focus on three themes illustrative of these growing business-level relations. First, we examine the different pathways taken by Australian businesses in their quest to develop a European market presence. Second, we discuss instances of business and technological innovation in the Australian context, including stories of success in digital innovation and university-corporate collaboration as well as cautionary tales for European institutions arising from the Australian experience. Third, we compare and contrast how Australian and European businesses have responded to the challenge of climate change, focussing on the issues of green lending and retail insurer performance.In foregrounding these three themes, we offer reflections on the implications and lessons for the growing number of businesses operating across both continents.     

ON THE COST OF NEW ISSUES OF COMMON STOCK: AN AMENDMENT TO THE CONSTANT GROWTH MODEL

Expansion decisions by corporate managements are importantly influenced by their perceptions of the firm's cost of capital and especially the cost of common equity. Their decision making is then influenced by the common perception that new issues of common stock are more costly than retained earnings because of the flotation costs inherent in new issues. Thus a rate of expansion that requires new issues is downgraded in decision making. In this paper the authors show that in actuality new issues of common equity may be less costly than retained earnings. Thus different decision-making implications are clearly involved.