Jon Woodroof

An Analysis of the Usefulness of Debt Defaults and Going Concern Opinions in Bankruptcy Risk Assessment

This study extends the research of Hopwood et al. (1994) and Mutchler et al. (1997) by empirically investigating the relationships between loan defaults, violation of loan covenants, going-concern opinions, and bankruptcy in bankruptcy prediction models. One objective of this study is to empirically test the ability of loan defaults/accommodations and loan covenant violations to assess the risk of bankruptcy. Another objective of this study is to investigate the impact of failing to control for these two distress events on results from tests of the usefulness of going-concern opinions in assessing bankruptcy risk. Results suggest that loan default/accommodation and loan covenant violation are both significant explanatory variables of bankruptcy at the time of the last annual report before the event. While a going-concern opinion variable appears to significantly explain bankruptcy, it is not significant when included in a model with loan default/accommodation and covenant violation variables. Consequently, our results suggest that researchers should include both loan default/accommodation and covenant violation as control variables when using bankruptcy to test the usefulness of going-concern opinions.

Continuous reporting benefits in the private debt capital market

The study is an experiment, administered over the Internet, measuring the effect that continuous reporting has on a companys ability to secure private debt capital. Specifically, we test whether commercial loan officers would be more willing to increase the probablity of loan acceptance to a mid-sized company operating in a continuous reporting environment than they would a company that operates in a traditional reporting environment. We find that high risk companies providing financial information to the lender on a daily basis have a higher probability of loan acceptance than do companies providing financial information to the lender on a quarterly basis. We did not find any results for low risk companies, suggesting the potential benefits of continuous reporting might not accrue to those type companies. The results were robust for both new and existing banking relationship scenarios. We did not find any results for the interest rate variable. The results of this study have significant implications for companies determined to be high risk. Commercial loans are the life-support for many companies, and failure to secure a line-of-credit could have devastating consequences for these high-risk companies.

An empirical assessment of user affectivity predispositions

Much research has been done on the construct of user satisfaction over the past 20 years. In fact, user satisfaction is probably the most studied construct in information systems research. Despite this attention, reported results have been inconclusive and sometimes contradictory. Is it possible that something else is occurring in this relationship that has not been modeled lit past studies? Perhaps user dispositional traits are confounding the results? Is it possible that users are predisposed to be either satisfied or dissatisfied in a way that has nothing to do with the system itself? To assess this question subjects were given a negative affectivity instrument. Following this, a laboratory experiment was staged in which students were subjected to a contrived software application. Then, tests were made to determine any correlation between a users negative affectivity and his or her perception of the information system. This paper investigates the impact that user predispositions have on how users perceive information systems.