Z-Score Models' Application to Italian Companies Subject to Extraordinary Administration

10 Pages Posted: 12 Nov 2015

See all articles by Edward I. Altman

Edward I. Altman

New York University (NYU) - Salomon Center; New York University (NYU) - Department of Finance

Alessandro Danovi

University of Bergamo (Italy)

Alberto Falini

University of Brescia - Department of Economics

Date Written: November 5, 2015

Abstract

It is normal for companies, during their life cycle, to alternate between positive and negative phases, periods of success and failure. When a negative period shifts from temporary to structural and chronic (and thus continues over time), the company is often destined to go bankrupt. The uncertainty regarding the exact moment when this takes place has brought about a plethora of quantitative and qualitative models aimed at predicting bankruptcy. This study applies the most well-known of these models, the Z-Score, through an application to Italian companies subject to Extraordinary Administration (a sort of Italian Chapter 11) between 2000 and 2010. Since Italy is one of the pivotal countries that will likely decide the fate of the Euro, methods to identify firms that may need financial support takes on an even more important effort than in normal times.

Suggested Citation

Altman, Edward I. and Danovi, Alessandro and Falini, Alberto, Z-Score Models' Application to Italian Companies Subject to Extraordinary Administration (November 5, 2015). Journal of Applied Finance (Formerly Financial Practice and Education), Vol. 23, No. 1, 2013, Available at SSRN: https://ssrn.com/abstract=2686750

Edward I. Altman (Contact Author)

New York University (NYU) - Salomon Center ( email )

44 West 4th Street
New York, NY 10012
United States
212-998-0709 (Phone)
212-995-4220 (Fax)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

Alessandro Danovi

University of Bergamo (Italy) ( email )

Piazza Rosate 2
I-24100 Bergamo, 24127
Italy

HOME PAGE: http://www.unibg.it

Alberto Falini

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122
Italy

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