chapter  28
22 Pages

■ Forecasting Default Probability without Accounting Data: Evidence from Russia

However, all the previous approaches rely on the basic assumption that financial statements are reliable: unfortunately, the recent defaults of business giants such as Enron, Parmalat, and Worldcom clearly show how accountancy data can be misleading and far from the true financial situation of a company, even for financial markets subject to strict business regulations and controls such as the American markets.