When a well functioning ear is stimulated with sound, electrical activities are generated within the Cochlea (Inner Ear) as well as in the combined nerve system connecting the cochlea to the brain. The cortex itself also generates electrical activities when a sound is processed at these high levels of brain activity.
All of these electrical activities spread to a certain degree through the surrounding tissue and are therefore also present, though at a very low level, on the outer surface of the head, at the ear lobe, within the ear canal, etc... The electric potential stemming from such sound stimulation is picked by electrodes placed in relevant locations on the head or ear canal.
As Auditory Brainstem Response is based on neurological responses caused by sound stimulation it can be used for hearing threshold evaluation. For a hearing impaired child or handicapped person not able to co-operate in traditional audiometric tests, Auditory Brainstem Response is the only way to evaluate the hearing threshold.
Other tests in a child's hearing evaluation are Otoacoustic Emissions, Tympanometry and Visual Reinforcement Audiometry.
Besides hearing threshold evaluation it can be used for neurological screening to evaluate the possibility of tumors affecting the hearing nerve.
Also it is part of the identification process of Central Auditory Processing Disorders (CAPD).