| Abstract: | This paper illustrates the use of graphical analysis as a complementary diagnostic tool in financial classification problems. For more than two decades statistical models have been used frequently to understand the information content of multivariate data in the context of financial classification. These statistical classification models can be complemented by the use of computer-generated multidimensional data displays and graphical analysis. We illustrate the use of the scatterplot matrix, which is the simplest and very effective form of graphical analysis on a sample of bankrupt and non-bankrupt firms. The paper demonstrates the complementary nature of the scatterplot matrix for tree-structured classification models. |
