An analysis of the use of debt default calculations and online credit ratings in predicting bankruptcy.

详细信息   

• 作者：Brathwaite ; Faye A.
• 学历：Doctor
• 年：2006
• 导师：Yatrakis, Pan
• 毕业院校：Nova Southeastern University
• 专业：Business Administration, Accounting.;Business Administration, Management.
• ISBN：9780542601828
• CBH：3211692
• Country：USA
• 语种：English
• FileSize：5182446
• Pages：112

文摘

Corporate defaults soared in 2001, marking the third consecutive year that they reached record levels. For the first time ever defaults broke the 200 mark, 216 rated and previously rated issuers defaulted on $116 billion of debt. Standard & Poor's default studies found that there is a clear correlation between credit quality and default remoteness. The study showed that the higher the rating, the lower the probability of default. The lower the obligator's original rating the shorter the time it takes to default (Brady & Bos, 2002).;This study examines the prediction of bankruptcy as measured by debt default in combination with cash flow ratios controlling for Standard and Poor's performance ratings. The Standard and Poor's Credit ratings information being readily available online provides information on the loan default in a timelier manner. Therefore, market participants and potential stockholders would not have to rely solely on the auditor's going concern opinion of the previous accounting period to predict bankruptcy.;The conclusion of this study has therefore cast doubt on the utility of Standard and Poor's ratings as a predictive tool for bankruptcy because it showed that as S&P ratings decrease (become lower) firms are more likely to declare bankruptcy is contrary to the Brady and Bos (2002) study showing that the higher the rating the lower the probability of default.