Abstract
Organizational researchers has long used point-biserial correlation to examine the strength of relationship between a continuous variable and a binary variable. Although there have been many concerns that this correlation underestimates the strength of the relationship, Williams and Peters (1998) offered excellent argument that these concerns were not justified. On top of this debate, we introduced three new elements that were not discussed in the literature to revisit this issue. Specifically, we propose that due to the new concepts of expected distribution similarity, continuous-binary conversion principles, and the number of point in Likert scale, the point biserial correlations underestimate the strength of the relationship. We illustrated these elements in four computer simulations and in one re-analysis of the most recent meta-analysis (Wong & Cheng, 2020). We proposed a preliminary way to adjust this. Finally, we discuss future directions to address the limitations of this research.
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