Abstract

http://ssrn.com/abstract=1333902
 
 

References (37)



 
 

Citations (7)



 


 



Financial Statement Recasting and Credit Risk Assessment


George E. Batta


Claremont McKenna College - Robert Day School of Economics and Finance

Ananda R. Ganguly


Claremont McKenna College - Robert Day School of Economics and Finance

Joshua G. Rosett


Claremont McKenna College - Robert Day School of Economics and Finance

August 27, 2012

Robert Day School of Economics and Finance Research Paper No. 2009-01

Abstract:     
This paper examines the importance of adjustments to corporate financial statements for credit risk assessment. Prior research has tended to examine individual adjustments one at a time. Since correlations among adjustments and control variables may bias inferences when researchers examine a single adjustment and ignore other adjustments, our results provide important new information about previous research by documenting whether or not such bias exists. We find that financial statement recasting adjustments — which aim to better reflect firms’ indebtedness, financing costs, and recurring earnings than reported financial numbers — are reflected in bond yield spreads and have an economically significant impact on credit pricing and loss forecasting. Among individual adjustment categories, we find that those for off-balance-sheet leases, defined benefit pensions, and securitized debt have an economically significant impact on credit pricing and loss forecasting.

Number of Pages in PDF File: 47

Keywords: credit analysis, financial analysis, credit pricing

JEL Classification: G12, G17, M41

working papers series





Download This Paper

Date posted: January 29, 2009 ; Last revised: September 22, 2012

Suggested Citation

Batta, George E. and Ganguly, Ananda R. and Rosett, Joshua G., Financial Statement Recasting and Credit Risk Assessment (August 27, 2012). Robert Day School of Economics and Finance Research Paper No. 2009-01. Available at SSRN: http://ssrn.com/abstract=1333902 or http://dx.doi.org/10.2139/ssrn.1333902

Contact Information

George E. Batta (Contact Author)
Claremont McKenna College - Robert Day School of Economics and Finance ( email )
500 E. Ninth Street
Claremont, CA 91711
United States
Ananda Roop Ganguly
Claremont McKenna College - Robert Day School of Economics and Finance ( email )
500 E. Ninth Street
Claremont, CA 91711
United States
(909) 607-0720 (Phone)
(909) 621-8249 (Fax)
HOME PAGE: http://www.claremontmckenna.edu/academic/faculty/profile.asp?Fac=519

Joshua G. Rosett
Claremont McKenna College - Robert Day School of Economics and Finance ( email )
500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-3625 (Phone)
909-621-8249 (Fax)
HOME PAGE: http://www.claremontmckenna.edu/academic/faculty/profile.asp?Fac=372
Feedback to SSRN


Paper statistics
Abstract Views: 2,146
Downloads: 447
Download Rank: 35,647
References:  37
Citations:  7

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.343 seconds