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Mixed Markov modelling of financial success: Empirical evidence with Swedish data

Jaana Aaltonen (Department of Business Administration, Åbo Akademi University, Finland)
Ralf Östermark (Department of Business Administration, Åbo Akademi University, Finland)

Kybernetes

ISSN: 0368-492X

Article publication date: 1 February 1998

435

Abstract

Discusses and empirically tests special cases of multiple‐chain mixed Markov latent class models with business data. The switches between negative and positive changes in earnings‐per‐share of firms are captured by alternative Markov models. The estimated response probabilities and state transition probabilities show interesting changes in the transformation patterns of the firms over time. Shows that Markov models can be valuable tools in predicting switches in profitability of firms.

Keywords

Citation

Aaltonen, J. and Östermark, R. (1998), "Mixed Markov modelling of financial success: Empirical evidence with Swedish data", Kybernetes, Vol. 27 No. 1, pp. 54-70. https://doi.org/10.1108/03684929810200530

Publisher

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MCB UP Ltd

Copyright © 1998, MCB UP Limited

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