Dear all,

I want to compute the standardized difference statistic using histograms for panel data so as to find which companies are below the thresholds. My problem is that in SD statistic proposed by the Burgstahler & Dichev the numerator has two independent components. I have panel data and i don't want to use them by year (at least a period of 2 years) so the assumption doesn't not exist as data in each bin of histogram depend on the adjacent ones. Is it right to drop companies that the difference in earnings between 2 years is less or equal with the width of bin? The optimal width (h) of the histogram depends on total sample (N) and the variance (s) but my second problem is that if i drop some observations then the h changes too..

Thank you in advance