Box-Cox Transformation Principle and Its Application in Normal Distribution of Financial Ratios
Yue Xue · Journal of Nanjing University of Science and Technology · 2005
Based on the research of 12 financial ratios of more than 5 571 annual reports from 1 100 listed companies(Shanghai Stock Exchange and Shenzhen Stock Exchange) in the years of 1998～2002,this paper concludes that most of the financial ratios are not normal distribution and the level of normality can be highly promoted through data cleaning and data transformation(such as Box-Cox transformation) on the basis of the industry samples.The normal transformation process shows that a few financial ratios can not be normalized.