This study is motivated by the continuing popularity of the Altman Z-score as a measure of distress risk. Altman first introduced the ‘Z' score in 1968 and 50 years later it is still going strong as a means to predicting bankruptcy. During these 50 years, academicians have studied the...

We document the negative effect of stock liquidity on default risk for a sample of 46 countries. We further find that default risk declines following the introduction of the Directive on Markets in Financial Instruments (MiFID)—an exogenous shock that increases liquidity. The effect of...

It is well understood that the equity of an insolvent firm can trade for a positive price so long as there is some positive probability that the firm will become solvent at some future point. Currently, however, this insight exists in the case law in an informal sense, while its use in the...

We estimate and test several default risk models using new and unique data on corporate defaults in the German stock market. While defaults were extremely rare events in the 1990s, they have been a characteristic feature of the German stock market since the early 2000s. We apply the structural...

This study uses 469,816 monthly observations of US public firms for the period 1990-2018 to document a strong positive relationship between short-term changes in financial distress risk and future stock price crashes. This result is economically significant as a one interquartile increase of the...

This paper looks at divestitures by 144 UK firms listed on the London Stock Exchange from 1985 to 1991 and investigates whether and how accurately investors price the firm's option to abandon assets in exchange for their exit value. Theory prices this real option as an American style put and the...

The main purpose of this research is to find out the relationship between capital structure (debt-equity) as and Profitability of the listed cement companies in Pakistan Stock Exchange. Further specific objective is to find out relation of debt equity with gross profit, earning per share, and...

Institutional investors have grown substantially in international, mature markets in last two decades parallel with the increase in their impact. They seek to own large proportions of equities; as a result they have become influential on the performance of companies in which they invest....

Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders. Dividend policy is considered the most important policy among the corporate policies. Several theories and models have been documented on the relevance and irrelevance of...