A major drawback of using regression analysis is that the technique makes a number of assumptions about the data, and accounting data sometimes do not satisfy these assumptions.

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Regression analysis assumes that the relationship between the variables is linear, there is no multicollinearity, homoscedasticity, and the errors are normally distributed. Accounting data may violate these assumptions, leading to inaccurate results.

A Major Drawback of Using Regression Analysis Is That the Technique