Working Paper No. 780

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

Published: December 9, 2008, revised August 2011Pages: 30Keywords: Credit Risk; Creditworthiness; Z-Scores; Default Predictions; GM; Ford; Restructuring; Macroeconomic ExposureJEL-codes: G11; G32; G33; G34; L16; L62
Published version

Corporate Distress and Restructuring with Macroeconomic Fluctuations: The Cases of GM and Ford Lars Oxelheim and Clas Wihlborg

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.


Lars Oxelheim


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Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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