.Practical implications – This approach can help to improve the use of risk analysis in decision-making by improving existing risk-management …

The existing probability of a company to be insolvent (bankrupt), is known as insolvency risk or distress risk. This … the rather unrealistic assumption of an unflawed capital market, insolvency risks are insignificant. The reason for that … is that insolvency costs plus financing and rating restrictions are almost nonexistent, and therefore the probability of …

clarifies the significance and effects of earnings risk, in general, and of insolvency risk, more precisely …