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CPS2129 Matilde Bini et al.
Growth parameters of Interest Coverage helps to predict the firms’
performance at the end of the observed period, measured by ROE 2017:

Coefficients Estimate P-
value
Intercept () -3.520 0.381

Intercept factor () 0.064 0.000
Slope factor 1 (1) -1.269 0.022

Slope factor 2 (2) 24.822 0.001

The model’s goodness-of-fit was evaluated based on the most commonly

used criteria (Bagozzi and Yi 1988):

Value

Chi-square 1368.3
p-value 0.000

Degree of freedom 211
RMSEA (Root Mean
Square Error of 0.028
Approximation)

CFI (Comparative Fit 0.922
Index)
TLI (TuckerLewis Index) 0.907
SRMR (Standardized
Root Mean 0.039
Square Residual)

These results show an adequate fit of the estimated model

6. Conclusions
The major results achieved by the analysis can be synthetized as follows:
LGCM approach detects successfully a time trend in riskiness-distress risk. The
relationship between interest coverage and leverage can represent the
riskiness over the period well and it grows stronger over the period. The
relationship between interest coverage and leverage is well fitted by a
quadratic curve; it means that the estimated riskiness-distress risk time trend

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