![]() ![]() ![]() Structural models of credit risk assume that firms default when they violate a debt covenant, their cash flow falls short of required debt payments, their assets become more valuable in competitors' hands, or their shareholders decide that servicing the debt is no longer in their best interests. Often employing probit analysis, structural models are debt-pricing models that link the probability of default to the structure of a firm's assets and liabilities. While credit scoring models do not estimate the probability of default, structural models attempt to do so. DePamphilis Ph.D., in Mergers, Acquisitions, and Other Restructuring Activities (Sixth Edition), 2012 Structural Models
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