Talk on default risk, bankruptcy and seasoned equity offerings in the U.S. market

The Centre for Accounting, Banking and Finance (CABF) of the Faculty of Business and Finance (FBF) organised a talk titled “Default risk, bankruptcy and seasoned equity offerings in the U.S. market” on 2 April 2024 via Microsoft Teams. The talk, moderated by FBF academic Dr Kogilavani Apadore, received a total of 117 participants in attendance.

Invited to deliver the talk was Associate Professor of Financial Accounting and Auditing at the UNE Business School, Dr Omar Al Farooque from the University of New England (UNE) Business School, Australia. Dr Omar, who is also an external examiner for UTAR Accounting programmes, has a wide range of experience in teaching accounting, auditing, finance and banking fields.

The talk aimed to explore empirical research, industry trends and regulatory changes influencing default risk and bankruptcy within the U.S. market. It sought to understand the impact of default risk and bankruptcy on financial choices made by companies in the U.S. market, and to assess the effectiveness of seasoned equity offerings (SEOs) as a risk management strategy for U.S. companies to mitigate default risk and steer clear of bankruptcy.

Dr Omar began his talk by providing an overview of the corporate fundraising exercises and the associated risks of default in the U.S. “The default risk assessment is vital as it indicates the probability of one’s inability to perform and fulfil his financial obligations, which in turn will affect his credit score and rating. Furthermore, to recognising and mitigating default risk assessment is fundamental to investors, lenders, institutions and regulators as they directly affect their investing and financing decisions,” he said.

Furthermore, he emphasised the insufficient understanding of how seasoned equity offerings (SEO) impact corporate failure. He pointed out that corporate firms typically opt for SEO to fund their growth post-initial listing because of enhanced public visibility, improved market valuations, and a desire to prevent bankruptcy and delisting through better governance and monitoring from institutional investors. As such, there is a strong need to investigate the effect of SEO on corporate default risk.

Before ending his talk, he shared his insights on how robust risk management practices and proper corporate governance mechanisms can mitigate the risks to safeguard stakeholder’s interests.

The talk ended with a Q&A and a group photograph session.

The moderator Dr Kogilavani introducing the speaker and his presentation topic

Dr Omar is an internationally recognised researcher in the accounting, finance, economics and business fields. He is also a member of the Chartered Accountant (CA ANZ), a Fellow of Certified Practicing Accounting (CPA) and Institute of Public Accountants (IPA), as well as a Fellow of International Association for Accounting Education and Research. Dr Omar also works extensively with Australian accounting professional bodies such as CPA as their Disciplinary Tribunal Panel member and IPA as a divisional advisory committee member. Currently, he is serving two Australian journals as Associate Editor. He has undertaken numerous invited presentations at national and international conferences, and research seminars/workshops.

Dr Omar presenting the SEO and probability of default over time

Dr Omar discussing the findings of the research

Top row, second from left: Dr Omar with participants at the end of the talk

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