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Errors in Databases Revisited: An Examination of the CRSP Shares-Outstanding Data

Stephen M. Courtenay and Stuart B. Keller
The Accounting Review
Vol. 69, No. 1 (Jan., 1994), pp. 285-291
Stable URL: http://www.jstor.org/stable/248274
Page Count: 7
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Errors in Databases Revisited: An Examination of the CRSP Shares-Outstanding Data
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Abstract

This article considers errors in databases commonly used by researchers. Specifically, the study investigates the manner in which the Center for Research in Security Prices (CRSP) tapes adjusts prices for stock distributions, i.e., stock dividends and stock splits. All distributions reported by CRSP during the period January 1 through December 31, 1989 were reviewed for proper distribution code, record date, ex-dividend date, and distribution date by comparison to a secondary data source, Moody's Dividend Record (MDR). Additionally, the accuracy of the factor used by CRSP to adjust the price and number of shares outstanding for the stock distribution was verified by comparison to MDR. Completeness of CRSP reporting was tested by tracing all stock distributions reported by MDR back into the CRSP tapes. In all, 718 distributions were examined. All differences (142, or 20 percent of the distributions) were reconciled where possible (11 could not be resolved) by examination of the respective companies' annual reports. Coding differences (91, or 64 percent of the differences) arose because of CRSP policy of designating as stock dividends all distributions that are less than or equal to 20 percent of the then-existing shares while all others are stock splits. This coding policy may affect research that uses stock distributions to test signalling by management. The remaining 51 exceptions (36 percent) included 20 ex-date differences that were perceived to be of little consequence, and 31 dissimilarities (22 percent) that are considered significant. In 27 of these variances, CRSP was found to be in error, which ranged from 75 percent to 100 percent when compared to primary data sources. In a second phase, the 1990 CRSP tape was examined to follow-up the status of 44 errors observed in the data review of previous work by these authors utilizing 1981 and 1982 data and of errors detected in phase one of this study. The evidence demonstrates that some errors remain undetected for long periods of time. Finally, the degree to which errors may affect the statistical testing of volume variables showed no significant bias.

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