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Int. J. Financial Stud. 2018, 6(3), 70; https://doi.org/10.3390/ijfs6030070

Applications of Distress Prediction Models: What Have We Learned After 50 Years from the Z-Score Models?

Leonard N. Stern School of Business, New York University, New York, NY 10012, USA
Received: 31 May 2018 / Revised: 1 July 2018 / Accepted: 3 July 2018 / Published: 2 August 2018
(This article belongs to the Special Issue Bankruptcy Prediction)
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Abstract

Fifty years ago, I published the initial, classic version of the Z-score bankruptcy prediction models. This multivariate statistical model has remained perhaps the most well-known, and more importantly, most used technique for providing an early warning signal of firm financial distress by academics and practitioners on a global basis. It also has been used by scholars as a benchmark of credit risk measurement in countless empirical studies. Practical applications of the Altman Z-score model have also been numerous and can be divided into two main categories: (1) from an external analytical standpoint, and (2) from an internal to the distressed firm viewpoint. This paper discusses a number of applications from the former’s standpoint and in doing so, we hope, also provides a roadmap for extensions beyond those already identified. View Full-Text
Keywords: Altman Z-score; bankruptcy prediction; fixed income investments; equity investments; ratings; regulators; auditors Altman Z-score; bankruptcy prediction; fixed income investments; equity investments; ratings; regulators; auditors
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Altman, E.I. Applications of Distress Prediction Models: What Have We Learned After 50 Years from the Z-Score Models? Int. J. Financial Stud. 2018, 6, 70.

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