Corporate Distress and Restructuring with Macroeconomic Fluctuations: The Cases of GM and Ford

Lars Oxelheim and Clas Wihlborg

No 780, Working Paper Series from Research Institute of Industrial Economics

Abstract: Traditional methods for evaluating corporate credit risk rarely consider the impact of the macro economy on corporate value and performance. We argue that lenders and management can obtain valuable information about the need for and approach to restructuring by decomposing default predictions into "intrinsic" and macroeconomic factors. We apply a method previously used for measuring macroeconomic exposures on default predictions in order to filter out macroeconomic factors. In this paper the method is applied on an analysis of the Z-scores for GM and Ford for the period 1996–2005. The macro economy has affected the two firms in different ways with implications for managements' and creditors' approaches to restoring their financial health.

Keywords: Credit Risk; Creditworthiness; Z-Scores; Default Predictions; GM; Ford; Restructuring; Macroeconomic Exposure (search for similar items in EconPapers)
JEL-codes: G11 G32 G33 G34 L16 L62 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-12-09
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp780.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0780

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().