Empirical Validation of the Taste–Value–Risk (TVR) Model and Sectoral Extension of the Crisis Liquidity Ratio (CLR): A Dual Approach to Risk and Liquidity Assessment under Information Asymmetry
Empirical Validation of the Taste–Value–Risk (TVR) Model and Sectoral Extension of the Crisis Liquidity Ratio (CLR): A Dual Approach to Risk and Liquidity Assessment under Information Asymmetry

Author(s): Petar Petrov, Elka Petrova
Subject(s): Economy, National Economy, Business Economy / Management, Public Finances, Accounting - Business Administration, ICT Information and Communications Technologies
Published by: Икономически университет - Варна
Keywords: Liquidity; Crisis Liquidity Ratio (CLR); Taste–Value–Risk (TVR); information asymmetry; cognitive economics; credit analysis; corporate governance
Summary/Abstract: This paper develops an integrated framework for assessing risk and liquidity when information between firms and creditors is uneven. We bring together a conservative accounting indicator – the Crisis Liquidity Ratio (CLR) – and a cognitive model, Taste–Value–Risk (TVR). Quantitatively, we analyse 12 leading companies from the primary automotive market in Bulgaria (72 annual financial statements for 2018–2023) and compare CLR with the traditional Current Ratio (CR) and Quick Ratio (QR). The evidence shows that CLR behaves more steadily in crisis periods, because it removes receivables that are only liquid on paper and focuses on assets that can be converted into cash. Qualitatively, we report a psycholinguistic experiment with 312 respondents (Bulgarian- and English-speaking), which tests how people organise their perceptions of value and risk along a “sweet–bitter” axis. “Financial security” is consistently placed in the “sweet” and low-risk area, while “high interest rate” is perceived as “bitter” and highly risky; “short-term loans” and “credit cards” fall in between. Reading CLR and TVR together creates a dual filter – accounting and cognitive – that reduces both distortions in reported information and misunderstandings in communication, and offers a grounded toolkit for credit analysis, corporate governance and risk management.

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