Owner liability and financial reporting information as predictors of firm default in bank loans

• Autores: Alnoor Bhimani, Mohamed Azzim Gulamhussen, Samuel da Rocha Lopes
• Localización: Review of Accounting Studies, ISSN-e 1573-7136, Vol. 19, Nº. 2, 2014, págs. 769-804
• Idioma: alemán
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• Resumen

  • We examine the effects of owner liability and non-accounting and financial accounting information on the probability of default as defined in Basel II in bank loan contracted by non listed firms. We model default as a function of owner liability and accounting and non-accounting information of non-listed firms, drawing on 43,117 annual accounts of 16,029 firms over a 7-year period. Our estimations based on mixed logistic regressions with random parameters show that the predicted default probability of full-liability firms is 0.72 times that of limited liability firms. The likelihood ratio test for omitted variables confirms the additional predictive ability of liability status over and above other non-accounting and financial accounting information. A Heckman self-selection model does not indicate sampling bias. The particular definition of default used in the study enables the findings to be generalizable across other institutional contexts.