Investment opportunities and bankruptcy prediction
Publication
, Journal Article
Lyandres, E; Zhdanov, A
Published in: Journal of Financial Markets
August 1, 2013
A firm's mix of growth options and assets in place is an important determinant of its optimal default strategy. Our simple model shows that shareholders of a firm with valuable investment opportunities would be able/willing to wait longer before defaulting on their contractual debt obligations than shareholders of an otherwise identical firm without such opportunities. More importantly, we show empirically using a dataset of recent corporate bankruptcies that measures of investment opportunities are significantly related to the likelihood of bankruptcy. Augmenting existing bankruptcy prediction models by these measures improves their out-of-sample forecasting ability. © 2013.
Duke Scholars
Published In
Journal of Financial Markets
DOI
ISSN
1386-4181
Publication Date
August 1, 2013
Volume
16
Issue
3
Start / End Page
439 / 476
Related Subject Headings
- Finance
- 3502 Banking, finance and investment
- 3501 Accounting, auditing and accountability
- 1502 Banking, Finance and Investment
Citation
APA
Chicago
ICMJE
MLA
NLM
Lyandres, E., & Zhdanov, A. (2013). Investment opportunities and bankruptcy prediction. Journal of Financial Markets, 16(3), 439–476. https://doi.org/10.1016/j.finmar.2012.10.003
Lyandres, E., and A. Zhdanov. “Investment opportunities and bankruptcy prediction.” Journal of Financial Markets 16, no. 3 (August 1, 2013): 439–76. https://doi.org/10.1016/j.finmar.2012.10.003.
Lyandres E, Zhdanov A. Investment opportunities and bankruptcy prediction. Journal of Financial Markets. 2013 Aug 1;16(3):439–76.
Lyandres, E., and A. Zhdanov. “Investment opportunities and bankruptcy prediction.” Journal of Financial Markets, vol. 16, no. 3, Aug. 2013, pp. 439–76. Scopus, doi:10.1016/j.finmar.2012.10.003.
Lyandres E, Zhdanov A. Investment opportunities and bankruptcy prediction. Journal of Financial Markets. 2013 Aug 1;16(3):439–476.
Published In
Journal of Financial Markets
DOI
ISSN
1386-4181
Publication Date
August 1, 2013
Volume
16
Issue
3
Start / End Page
439 / 476
Related Subject Headings
- Finance
- 3502 Banking, finance and investment
- 3501 Accounting, auditing and accountability
- 1502 Banking, Finance and Investment