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

Lars Oxelheim, Clas Wihlborg

Research output: Working paper/PreprintWorking paper

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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.
Original languageEnglish
PublisherIFN Working Paper series
Publication statusUnpublished - 2008

Subject classification (UKÄ)

  • Business Administration
  • Economics and Business

Free keywords

  • GM
  • default predictions
  • Z-scores
  • credit risk
  • creditworthiness
  • Ford
  • restructuring

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