Bankruptcy prediction models: an empirical analysis of Altman’s Z-Score model in forty greek companies in the period of economic recession.

Abstract

This paper examines the efficiency of Altman’s model (1968) about predicting corporate bankruptcy in Greece. After a short presentation of other bankruptcy models, Altman’s model is analyzed. The sample used in the present paper is consisted of forty Greek companies, all listed on the Hellenic Stock Exchange. The years of the data used are from 2005 to 2013. The methodology used is similar to the one Altman used in 1968. The basic ratio components are presented and compared between bankrupt and non-bankrupt companies. Additionally, the results of the test are presented and compared to those of Altman’s regarding predicting accuracy. Moreover, the efficiency of the model is tested in sample collected in a period when the macroeconomic environment is heavily disturbed due to the Greek economic recession.