Date of Award
Master of Science (MS)
Economics and Finance
Knowing whether or not a company is financial stable has always been a top concern for analysts and money managers. This paper compares the effectiveness of default prediction using two different types of measures: accounting and market based. Accounting measures have been the most popular even though, according to theory, a market based measure reflects all available information. Theory goes as far to say that accounting measures can add no incremental value to a market based measure. In my research I found that accounting based measures can be effective in their predictive power; the market-based measure (BSM) results were much more difficult to estimate within the limits of this research project.
Heaps, Jarom, "Assessing the Probability of Bankruptcy" (2015). All Graduate Plan B and other Reports. 763.