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Adapting Altman's model to Bulgarian public companies

Author

Listed:
  • Venelin Georgiev

    (University of Economics - Varna)

  • Reni Petrova

    (University of Economics - Varna)

Abstract

Warning signals and indications of pending possible future corporate failure of a company are usually spotted at an earlier stage than that of the reported results. It is on that basis that there exist the models developed by leading financial analysts, based on an integral indicator, which predicts -in the most simplified, but at the same time in the mosteffective way -the future development of enterprises.In the present work there is studied the applicability -in the Bulgarian practice –ofone of these models of the widest international popularity (the so-called Altman Z score).It has been ascertained that it identifies correctly only just 54.55% of the enterprises beinganalyzed. Based on an empirical study of 40 Bulgarian public companies conducted during a 7-year period, there is proposed a modification of the above model, which increases its predictive characteristics for the Bulgarian conditions.

Suggested Citation

  • Venelin Georgiev & Reni Petrova, 2014. "Adapting Altman's model to Bulgarian public companies," An Annual Book of University of Economics - Varna, University of Economics - Varna, vol. 85(1), pages 107-151, January.
    • Handle: RePEc:vrn:yrbook:y:2014:i:1:p:107-151
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    Cited by:

    1. Ekaterina Tzvetanova, 2019. "Adaptation of the Altman’s Corporate Insolvency Prediction Model – The Bulgarian Case," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 125-142.

    More about this item

    Keywords

    Altman's model; corporate failure; integral indicator; development of enterprises;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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