Assessing the discriminative power of rating systems is an important question to banks and to regulators. In this article we analyze the Cumulative Accuracy Profile (CAP) and the Receiver Operating Characteristic (ROC) which are both commonly used in practice. We give a test-theoretic...

This paper describes the first thorough analysis of the interest risk of German banks on an individual bank level. We develop a new method that is based on time series of accountingbased data to quantify the interest risk of banks and apply it to analyze the German banking system. We find...

The business reporting standard XBRL offers the opportunity to easily extract and analyze a sufficient number of monetary items out of single annual reports for statistical analysis purposes. Using XBRL 10-K reports filed with the SEC EDGAR system, we derive first digit distributions for single...

This article examines the influence of CEO changes in large German companies manifested in their financial statements during three defined phases of the turnover process. It is shown that the conflicting results in previous research might have stemmed from not differing among turnover reasons....

This paper analyzes how agency problems in nancial contracting determine risk-taking andinvestment. In perfect capital markets a risk-neutral rm would invest until the expectedmarginal return equals the interest rate. However, as rms with little net-worth face agencycost in nancial contracting...

This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that...

It is a basic premise of accounting that supplying managers with "good", problem-adequate, reliable, valid, actual, and material information will increase the efficiency of their decisions. However, production of such information is only a necessary, but not a sufficient condition for better...