The Electronic Journal of Business Research Methods provides perspectives on topics relevant to research in the field of business and management
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Journal Issue
Volume 16 Issue 1 / Mar 2018  pp1‑54

Editor: Ann Brown

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Negative Denominators in Index Variables: The Vulnerability of Return on Equity, Debt to Equity, and Other Ratios  pp1‑10

David B. Thornblad, Hanko K. Zeitzmann, Kevin D. Carlson

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This paper highlights construct validity issues that can occur when researchers utilize index variables (commonly referred to as ratios) in which the denominator can become negative. These indexes are commonly used in management research, and we demonstrate that indexes constructed from data which includes negative values for the denominator lose their ordinal properties and can be difficult, if not impossible, to interpret. Further, we show that common empirical practices to resolve these issues do not solve issues of ordinality and interpretability and may lead to additional validity issues. We recommend the use of alternate measures not affected by the issues described in this article to increase the validity of future organizational research. 


Keywords: Indexes, methodological issues, negative denominators, ratios, research methodology.


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An Original Information Systems Research Method: The Discount Focus Subgroup Method  pp11‑24

Mohanad Halaweh

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The Collective Use of Forms of Language as Cultural Artefacts to Represent Public Understanding in Case‑Studies  pp25‑37

Stanley Mukasa, Terry Warburton

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e‑Surveying and Respondent Behaviour: Insights from the Public Procurement Field  pp38‑53

Anthony Flynn

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Editorial for EJBRM Volume 16 Issue 1  pp54‑54

Ann Brown

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