Proof of Preliminary Empirical Validation For Alaali Interest Coverage Ratio (A-ICR)

This document provides explicit preliminary empirical validation of the Alaali Adjusted Interest Coverage Ratio (A-ICR) model developed by Hasan Alaali. Utilizing panel data regression methods (OLS) and instrumental variable techniques (GMM - IV2SLS approximation), this validation assesses the predictive and explanatory power of the A-ICR metric using financial data from Aluminium Bahrain (Alba) and Alcoa Corporation (USA) spanning the period 2019–2023. The preliminary results demonstrate moderate explanatory power, highlighting a significant negative relationship between financial leverage (Debt-to-Equity Ratio) and corporate financial performance (Return on Equity). The validation explicitly confirms the theoretical rationale underlying the A-ICR model, while clearly acknowledging limitations such as the small sample size. Disclaimer This document explicitly serves as preliminary empirical validation. The results presented herein are based on a limited dataset and are therefore subject to further rigorous empirical testing. Readers and researchers are advised to interpret these findings with caution until further comprehensive validations are completed and published.