Audit Integrity Announces Results of Corporate Bankruptcy Study; Identifies Companies Most Likely to Declare Bankruptcy

Wed Sep 16, 2009 9:00am EDT

* Reuters is not responsible for the content in this press release.

Media and Transportation Sectors Have the Highest Number of Companies at Risk
LOS ANGELES--(Business Wire)--
In response to amplified concern in the market for risk related to corporate
insolvency, Audit Integrity, an independent financial research and risk modeling
firm, today released the results of its bankruptcy model research and has
identified 20 corporations, with $1 billion or more in market capitalization,
that have the highest probability of declaring bankruptcy in the next twelve

According to the U.S. Bankruptcy Courts, the number of business bankruptcy
filings during the first six months of the year rose 64 percent over the first
half results in 2008. With the increased incidence of company failures,
corporate stakeholders such as insurance companies, auditing professionals,
procurement executives and regulators, find corporate survival to be a critical
risk issue. 

Current approaches to determining bankruptcy risk generally fail to react
quickly to changes to the economic environment, and do not factor in the
potential for corporate fraud. By incorporating these risk factors into the
Audit Integrity Business Risk Model, this new approach has been found to greatly
improve the identification of companies at risk of bankruptcy. Against the most
widely used bankruptcy model, the Altman Z-Score, the Audit Integrity bankruptcy
Risk Model results have been more than 20 percentage points higher in predicting

The results from Audit Integrity`s bankruptcy research indicate that the media
and transportation industries are especially vulnerable. Of the over 2,500 U.S.
corporations receiving bankruptcy risk scores from Audit Integrity, TV and
Publishing companies were found to be over four times as risky as other
companies, while automobile and airline industries were just slightly less

The findings suggest that fraudulent accounting and poor governance impact
bankruptcy risk in addition to more generally accepted factors such as measures
of liquidity, leverage and profitability. 

"Evidence shows that bankruptcy filings tend to lag after an economic downturn
so its extremely important that investors and those concerned with the risks
around corporate failure mitigate their exposure to companies likely to
collapse," said Jack Zwingli, CEO of Audit Integrity. "Market volatility and
sudden downturns such as we have been experiencing must be factored into
bankruptcy risk. Fraud also plays a part, especially when companies are faced
with survival decisions. These are the toughest companies to identify because,
on paper, they appear solvent. Our model uncovers the underlying fraud that can
be behind seemingly healthy financial statements." 

Audit Integrity has identified the following companies that have the highest
probability of declaring bankruptcy among publicly traded firms with more than
$1 billion market capitalizations:

* Advanced Micro Devices, Inc. 
* Amkor Technology, Inc. 
* AMR Corporation 
* Apartment Investment and Management Co. 
* CBS Corporation 
* Continental Airlines, Inc. 
* Federal-Mogul Corporation 
* Hertz Global Holdings, Inc. 
* Interpublic Group of Companies, Inc. 
* Las Vegas Sands Corp. 
* Liberty Media Corporation (Capital) 
* Macy's, Inc. 
* Mylan Inc. 
* Oshkosh Corporation 
* Redwood Trust, Inc. 
* Rite Aid Corporation 
* Sirius XM Radio Inc. 
* Sprint Nextel Corporation 
* Textron Inc. 
* The Goodyear Tire & Rubber Company

To get the full list of companies Audit Integrity has identified, including
small-cap and mid-cap firms, please visit or call

About Audit Integrity

Founded in 2002, serving investors, insurers, auditors and corporate finance
professionals, Audit Integrity is a leading independent research firm that rates
more than 12,000 public companies in North American and Europe based on their
corporate integrity. In addition to its flagship Accounting and Governance Risk
(AGR) ratings, Audit Integrity also forecasts bankruptcy risk, class action
litigation risk, material financial restatement risk, and equity performance
risk. The statistical correlation of these ratings has been confirmed by
internal and third-party tests. Audit Integrity has offices in Los Angeles and
New York City. For more information, please visit 

Starkman & Associates
Jeffrey Richardson, 212-252-8545, ext. 11
James Cheston, 212-252-8545, ext. 22

Copyright Business Wire 2009