Rose Research Data Used for Student Senior Thesis Developing a Model to Predict Bond Ratings

Rose Institute research assistant Marina Giloi ’14 used the Kosmont Cost of Doing Business database compiled by the Rose Institute as the foundation of her senior thesis research project. Marina analyzed the use of financial measures such as tax rates and city financial statement ratios to develop a model that examines and predicts these financial measures’ relationships to city bond ratings. Professor Joshua Rosett of the Robert Day School of Economics and Finance was her thesis advisor. Marina graduates this month with a BA in Philosophy, Politics, and Economics, and Economics-Accounting.

Marina’s paper uses collected sample data from 96 cities across 33 states in the U.S. to examine statistical relationships and predictions between business tax rates, city financial statement line item ratios, and bond ratings. It finds a model that predicts city bond ratings based on selected tax rates and financial ratios. This paper then tests the model on California cities and finds that it can accurately predict many California city bond ratings. These bond ratings are then compared to other state’s business tax rates to indicate that lower business tax rates may predict better city bond ratings and, by extension, greater city prosperity.

This paper won Best Thesis for Economics-Accounting.

Follow this link to read the entire paper.