This note seeks to clarify whether applications of Cox's (1961) modified likelihood ratio principle logically require a two- or one-tailed test. Logic requires the test of discrimination be one-tailed and the significance test for non-nested hypotheses be two-tailed. The significance test of a...

This survey outlines various models used to analyze the impact of taxation on the firm's leverage decision. The models incorporate: i) differential taxation of household from a progressive tax system; ii) loss offsetting under the corporate tax; iii) managerial incentive to avoid moral hazard;...

This paper attempts to synthesize various procedures for testing non-nested hypotheses within the framework of artificial nesting, and establishes the result that different tests correspond to different treatments of its identification problem. Numerical and a priori identification methods are...

Within the framework of linear regression, errors arising from artificial inclusion or exclusion of variables are considered with augmentations or restrictions on a given maintained hypothesis. This permits exploitation of relations between tests based on Wald and Lagrange Multiplier Principles....

This paper distinguishes between the principles upon which testing statistical hypotheses may be based and the practical methods these principles generate. Seber's (1964) conclusion that the Wald, Lagrange Multiplier and Likelihood Ratio Principles all yield the same test statistic for linear...

This paper considers the relations between the classical identifiability test statistic and corresponding significance tests of the coefficients of endogenous variables of one equation of a linear interdependent system in the context of Generalized Classical Linear (GCL) estimation. Known...

This note applies the traditional analysis of specification error to the Cox-tests for separate regression models. Incorrect inclusion of variables in the alternative model leads to consistent tests of the null, whereas incorrect exclusion of variables from the alternative may render the tests...

The first paper demonstrates that Theil's (1961) minimum error variance criterion is asymptotically valid for choosing between non-nested non-linear regression models, as long as one of the models is 'true'. The second paper shows that when the null and alternative hypotheses are separate...

This paper seeks to distinguish the principles upon which testing of statistical hypotheses may be based and the practical method which these principles generate. Six examples are given for the case of nested hypotheses as illustrations. The concept of an artificial model is analyzed. When...

This paper is concerned with the problem of testing one form of covariance structure against another in a normal linear regression. All point-optimal tests recently proposed by King and his associates can be interpreted as special cases of the Cox test for non-nested hypotheses. This provides a...