Louis W. Glorfeld

An Improvement on Horn's Parallel Analysis Methodology for Selecting the Correct Number of Factors to Retain

One of the most important decisions that can be made in the use of factor analysis is the number of factors to retain. Numerous studies have consistently shown that Horns parallel analysis is the most nearly accurate methodology for determining the number of factors to retain in an exploratory factor analysis. Although Horns procedure is relatively accurate, it still tends to error in the direction of indicating the retention of one or two more factors than is actually warranted or of retaining poorly defined factors. A modification of Horns parallel analysis based on Monte Carlo simulation of the null distributions of the eigenvalues generated from a population correlation identity matrix is introduced. This modification allows identification of any desired upper 1 - a percentile, such as the 95th percentile of this set of distributions. The 1 - ax percentile then can be used to determine whether an eigenvalue is larger than what could be expected by chance. Horn based his original procedure on the average eigenvalues derived from this set of distributions. The modified procedure reduces the tendency of the parallel analysis methodology to overextract. An example is provided that demonstrates this capability. A demonstration is also given that indicates that the parallel analysis procedure and its modification are insensitive to the distributional characteristics of the data used to generate the eigenvalue distributions.

The link between bank monitoring and corporate dividend policy: The case of dividend omissions

Abstract This study investigates whether bank monitoring influences investor response to a borrowing firms decision to omit its dividend payments. We establish a new link between the theories of banking and dividend policy in an examination of how bank monitoring and firm dividend signals complement one another to resolve information asymmetries. Results indicate that, for small firms, investors interpret the dividend decision as a function of bank monitoring and the dividend signals taken together. Also reported are the results of tests examining the differences between the monitoring effects of banks versus public and private non-bank lenders.

An Evaluation of the Use of Tests of Significance in Organizational Behavior Research

This paper examines the use of parametric and nonparametric tests of significance reported in selected organizational behavior journals from 1976 to 1961. Parametric tests dominated their nonparametric counterparts. The tests used more frequently, the most popular nonparametric tests, and the differences and similarities among studies published in various journals are reported. An evaluation of the appropriateness of the use of tests of significance in organizational behavior during the period is made.