Solvency Assessment And Annual Reporting PDF Download

This study addresses the informative value of corporate annual financial reporting for the purpose of solvency assessment. The author reviews theories on capital structure in order to explore the determinants of solvency. Empirical research was conducted on bond rating. In order to determine the key factors underlying the rating analysis, and to explore whether theoretical arguments can also be found in the practice of bond rating, content analysis was applied on a sample of textual rating rationales of Moody's Investors Service. In order to measure the informative value with respect to the key factors of bond rating, a disclosure score was measured on a sample of annual reports. Finally, bond rating was modeled using neural networks. Special attention was paid to the problem of overfitting.