Original altman bankruptcy model and its use in predicting failure of czech firms
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Date
2013-08
Authors
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Journal ISSN
Volume Title
Publisher
Technická Univerzita v Liberci
Technical university of Liberec, Czech Republic
Technical university of Liberec, Czech Republic
Abstract
The ability to successfully derive future values of key variables has always belonged with the objects of human interest and has not even avoided the business sector. For several decades, many economists have been trying to find a way how to assess the health of a business as accurately as possible, or predict bankruptcy. This article aims to assess the discriminatory power of one of the most famous and most discussed corporate predictive models, the Altman Z-Score from 1968. The research is focused on four main areas of assessing the discriminatory power of the model. The first part deals with the overall discriminatory power of the model; the second part is aimed at quantifying the impact of individual variables on misclassification of enterprises in bankruptcy. The third part quantifies the discriminatory power of individual variables of the model. The last part compares the classification accuracy of the original model and the modified Altman model which is also adapted to firms not traded publicly. The results are compared with the findings of other authors. The empirical research is based on the accounting data of Czech companies from the manufacturing industry.
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Subject(s)
Altman, bankruptcy, corporate failure, predictive model, Z-score
Citation
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ISBN
978-80-7372-953-0