Predicting the Risk of Bankruptcy of Bulgarian Public Companies Through Discriminant Multifactor Models

Authors:

Pages: 176-188

Abstract:

This study deals with the empirical application of eleven models for predicting the risk of bankruptcy and their approbation in terms of Bulgarian public companies that make up the broad BGBX-40 index. The results of the Altman Z-Score Model (1968) show that 16 of the companies are stable, six have an uncertain future with regard to their financial health, while the remaining 16 are likely to become insolvent. The Ohlson Model (1980) almost covers the results of Altman’s Two-Factor Model, which indicates full parity in terms of the companies’ financial stability. The final results of the Fulmer Model (1984) do not confirm the statement of stability in the financial situation of the companies analyzed reported by the Ohlson Model (1980). Here we can see a balance in the results, with 20 companies showing stability and 18 a likelihood of bankruptcy.

Keywords:

risk; bankruptcy; scoring model; BSE; MDA.

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