| Article ID: | iaor201522755 |
| Volume: | 7 |
| Issue: | 1 |
| Start Page Number: | 27 |
| End Page Number: | 36 |
| Publication Date: | Mar 1984 |
| Journal: | Journal of Financial Research |
| Authors: | Perry Larry G, Henderson Glenn V, Cronan Timothy P |
| Keywords: | decision theory: multiple criteria, investment, simulation, statistics: empirical, statistics: regression |
Previous statistical models designed to predict bond ratings use a variety of financial data and ratios; however, the possible effect of the industry in which the firms operate is generally disregarded. Although the exact bond rating process used by the rating agencies is not known, industry analysis is an important component of the process. This study evaluates the use of industry‐specific multiple discriminant functions for predicting bond ratings. The results support using such a technique.