A logistic analysis of bankruptcy within the US local telecommunications industry

Default Risk of the UK Real Estate Companies: Is There a Macro-economy Effect?

“…This amounts to over 1,300 observations from company accounts and 139 companies. We acknowledge the fact that our data size is relatively small compared to other empirical work done ((Foreman (2003), Kolari et al (2002), Lennox (1999), Lawrence, Smith and Rhoades (1992), West (1985), Martin (1977) and Altman, Haldeman and Narayanan (1977)). If one limits the study to one country and furthermore focuses on one industry, like we do, the sample inevitably will not be large enough.…”

“…It is very common though for empirical work that includes financial ratios (measured in percentages) as explanatory variables to get very low magnitude for the regression coefficients. Other authors in the bankruptcy literature also get very low marginal effects ( (Foreman, (2003), Lennox, (1999), and Smith and Lawrence (1995)). …”

“…Kolari et al find that net interest income/total assets, net income after taxes/total assets, total equity/total assets and net loan charge-offs/total assets have a statistically significant effect on the probability of default of the USA large banks. Foreman (2003), in a recent study of bankruptcy of the US local telecommunications industry, estimates a Logit model using a cross section data set of 77 "Competitive Local Exchange Carriers" (14 bankrupt and 63 non-bankrupts) as of year-end 1999. He finds that the probability of default of the CLECs is crucially affected by traditional financial ratios such as, the earnings per share, the retained earnings to assets, the return on assets and the working capital to sales.…”

“…Possibly this is the reason why this kind of sample bias has not attracted any attention in the relevant literature. Survivorship bias is not acknowledged as a problem in recently published work in the area ((see Foreman (2003), Lennox (1999) and Heffernan (1995) Table 2 shows the distribution of the observations for the failed and non-failed commercial real estate companies over the period 1980-2001. It is evident that there is a clustering of defaults of real estate companies around the periods that recession hit the UK economy.…”

Business Separation in Telecommunications: Lessons from the U.S. Experience

“…The lobbying continued even after the passage of the Telecommunications Act of 1996, 15 as the industry sought to restructure itself: according to an analysis by The Washington Post in 1998, the local and long distance telephone companies had spent $166 million on legislative and regulatory lobbying since 1996, more than the tobacco, aerospace, and gambling lobbies combined. 16 Not only did telephone companies use the regulatory arena to build records for their lobbying cases on the long distance restrictions (Kaserman and Mayo, 2002), but the newly formed CLECs got caught up in the regulatory process to such an extent that some went bankrupt (Foreman, 2003). The tension was resolved by the passage and implementation of the 1996 Act, which as we explain below provided a clear path for the removal of the long distance restrictions.…”