Tanthanongsakkun, SuparatanaTreepongkaruna, Sirimon2015-12-072015-12-070312-8962http://hdl.handle.net/1885/25092This paper examines how the default likelihood indicator computed from the option-based model of Merton (1974) together with two default-related factors, namely firm size and book-to-market ratio, effectively explain credit ratings when compared to accounting ratios. Using Australian companies that are rated by Standard and Poor's during 1992-2003 and ordered probit analysis we find that the market-based model is more informative in explaining credit ratings than the accounting-based model.Keywords: Credit ratings; Default risk; Ordered probit20082016-02-24