PREDIKČNÍ SCHOPNOST ALTMANOVA Z-SKÓRE EVROPSKÝCH SOUKROMÝCH SPOLEČNOSTÍ
Predictive Ability of Altman Z-score of European Private Companies

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Summary/Abstract: The paper investigates the relationship between the financial distress of European privatecompanies identified by the Altman Z-score and real bankruptcy. We extend the traditionalZ-score with the asymmetric effect of economic activity. Our results show higher forecastingperformance of the Altman Z-score of large companies in a three-year projection. We arguethat our results differ from Altman (1968) because of specific market conditions in Europethat enable prolongation of activity after financial distress is identified. We also emphasizethe role of liquidity, size, performance and indebtedness in increasing financial distressforecasting performance. Finally, we extend our prediction model with selected indicatorsof quality and development of the institutional environment.

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