'Going Concern' Analysis Is Bankruptcy Crystal Ball: Study

Law360, New York (August 22, 2013, 4:48 PM EDT) -- Companies are reasonably good predictors of their own bankruptcies, according to a study released Thursday that lends weight to an unpopular new accounting rule requiring management to discuss a company's insolvency risk in securities filings.

The study, conducted by accounting experts at Duke University, looked at the "management discussion and analysis" section of U.S. Securities & Exchange Commission filings for 262 companies that went bankrupt between 1995 and 2011. The researchers looked for either an explicit mention of insolvency or subtler language — words like "liquidate," "deficit" or "challenging" — that suggested a rocky future.

They found an 85 percent correlation,...

Stay ahead of the curve

In the legal profession, information is the key to success. You have to know what’s happening with clients, competitors, practice areas, and industries. Law360 provides the intelligence you need to remain an expert and beat the competition.

  • Access to case data within articles (numbers, filings, courts, nature of suit, and more.)
  • Access to attached documents such as briefs, petitions, complaints, decisions, motions, etc.
  • Create custom alerts for specific article and case topics and so much more!


Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!