EXAMPLE 11.7 Describing Assets, Sales, and Profits

bbcg30

CASE 11.1 A quick scan of the data in Table 11.1 (page 534) using boxplots or histograms suggests each variable is strongly skewed to the right. It is common to use logarithms to make economic and financial data more symmetric before doing inference as it pulls in the long tail of a skewed distribution, thereby reducing the possibility of influential observations. Figure 11.2 shows descriptive statistics for these transformed values, and Figure 11.3 presents the histograms. Each distribution appears relatively symmetric (mean and median of each transformed variable are approximately equal) with no obvious outliers.

image
Figure 11.2: FIGURE 11.2 Descriptive statistics, Example 11.7.

537

image
Figure 11.3: FIGURE 11.3 Histograms, Example 11.7.