Open AccessAn Overlook at Bankruptcy Prediction in Italy in 2016: An Application of the Altman’s Model on Failed Italian Manufacturing Companies In The 2016-First Quarter
Author(s) -
Matteo Pozzoli,
Francesco Paolone
Publication year - 2016
Publication title -
international journal of accounting and financial reporting
Language(s) - English
Resource type - Journals
ISSN - 2162-3082
DOI - 10.5296/ijafr.v6i2.10339
Subject(s) - bankruptcy , quarter (canadian coin) , bankruptcy prediction , sample (material) , business , econometrics , accounting , actuarial science , economics , history , finance , thermodynamics , physics , archaeology
During their life cycle, businesses must face positive and negative phases in financial trends which translate into periods of success and failure, respectively. When a negative period shifts from temporary to permanent (and thus continues over time), the company is often destined to cease. This work aims to test the most used bankruptcy prediction model, the Altman Z-Score, through an application on a sample of Italian manufacturing companies (S.p.A. and S.r.l.) which went bankrupt within the first quarter of 2016. The results confirm a good predictive effectiveness in relation to bankrupted companies with significant discrepancies between the different, analyzed juridical entities. Further research is still open on Italian peculiarities that may require the development of ad hoc parameters.