Abstract

http://ssrn.com/abstract=1395229
 
 

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Altman’s Z-Score Models of Predicting Corporate Distress: Evidence from the Emerging Sri Lankan Stock Market


Lalith P. Samarakoon


University of St. Thomas

Tanweer Hasan


Roosevelt University

2003

Journal of the Academy of Finance, vol. 1, pp. 119-125, 2003

Abstract:     
This study investigates the ability of three versions of Altman’s Z-Score model (Z, Z’, and Z”) of distress prediction developed in the U.S. to predict the corporate distress in the emerging market of Sri Lanka. The results show that these models have a remarkable degree of accuracy in predicting distress using financial ratios computed from financial statements in the year prior to distress. The overall success rate of 81% is observed using the Z”-Score. The out-of-sample evidence provided in this paper means that the Z-Score models seem to have a very good potential in evaluating the risk of corporate distress in smaller emerging markets as well.

Number of Pages in PDF File: 11

Keywords: Altman Z, Distress prediction, Ratios, Emerging markets, Sri Lanka

JEL Classification: G15, G32, G33

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Date posted: May 13, 2009 ; Last revised: February 16, 2010

Suggested Citation

Samarakoon, Lalith P. and Hasan, Tanweer, Altman’s Z-Score Models of Predicting Corporate Distress: Evidence from the Emerging Sri Lankan Stock Market (2003). Journal of the Academy of Finance, vol. 1, pp. 119-125, 2003. Available at SSRN: http://ssrn.com/abstract=1395229

Contact Information

Lalith P. Samarakoon (Contact Author)
University of St. Thomas ( email )
2115 Summit Ave
St. Paul, MN 55105
United States
HOME PAGE: http://www.stthomas.edu/business/faculty/directory/Samarakoon_Lalith.html
Tanweer Hasan
Roosevelt University ( email )
Chicago, IL 60605
United States
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