The importance of secondary sample testing cannot be over-emphasized and
it appears appropriate to apply these measures at this stage. A method suggested
by Frank et al.^^ for testing the extent of the aforementioned search
bias was applied to the initial sample. The essence of this test is to estimate
parameters for the model using only a subset of the original sample, and then
to classify the remainder of the sample based on the parameters established.
A simple t-test is then applied to test the significance of the results.
Five different replications of the suggested method of choosing subsets
(sixteen firms) of the original sample are tested, with results listed in Table 3.*^
The test results reject the hypothesis that there is no difference between the
groups and substantiate that the model does, in fact, possess discriminating
30. R. E. Frank, W. F. Massy, and G. D. Morrison, "Bias in Multiple Discriminant Analysis,"
Journal oj Marketing Research, vol. 2 (August 196S), pp. 2SO-2S8.
31. The five replications included (1) random sampling (2) choosing every other firm starting
with firm number one, (3) starting with firm number two, (4) choosing firms 1-16, and (S)
firms 17-32.