IDEAS home Printed from https://ideas.repec.org/a/ibn/ijefaa/v11y2019i4p25-29.html
   My bibliography  Save this article

Examining the Effect of Altman¡¯s Zeta Model Score on the Share Price of Healthcare Companies Listed at Kuwait Stock Exchange

Author

Listed:
  • Musaed S. AlAli

Abstract

The aim of this study is to examine the financial soundness and the effect of Altman¡¯s Zeta model score on the share price of healthcare companies listed at Kuwait stock exchange (KSE) over the period 2013-2017. Zeta model is a widely used model in examining the probability of bankruptcy for companies; it has been proven to be a reliable model in measuring the financial soundness for companies. Results obtained from this study showed that both companies under study, Yiaco and Advanced Technology, are confronting financial difficulties and are facing the risk of bankruptcy. The study also revealed that there is a statistically significant direct relation between Zeta score and the share price of these companies indicating that Kuwaiti investors do take the financial distress indicators into consideration when making their investment decisions.

Suggested Citation

  • Musaed S. AlAli, 2019. "Examining the Effect of Altman¡¯s Zeta Model Score on the Share Price of Healthcare Companies Listed at Kuwait Stock Exchange," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(4), pages 25-29, April.
    • Handle: RePEc:ibn:ijefaa:v:11:y:2019:i:4:p:25-29
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ijef/article/view/0/38835
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ijef/article/view/0/38835
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    2. Altman, Edward I. & Haldeman, Robert G. & Narayanan, P., 1977. "ZETATM analysis A new model to identify bankruptcy risk of corporations," Journal of Banking & Finance, Elsevier, vol. 1(1), pages 29-54, June.
    3. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yaser A. AlKulaib* & Musaed S. AlAli, 2019. "Exploring the Probability of Bankruptcy for Conventional Insurance Companies Listed at Kuwait Stock Exchange and its Effect on Their Share Prices," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(9), pages 1341-1346, 09-2019.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Chunyu & Lou, Chenxin & Luo, Dan & Xing, Kai, 2021. "Chinese corporate distress prediction using LASSO: The role of earnings management," International Review of Financial Analysis, Elsevier, vol. 76(C).
    2. Suzan Hol, 2006. "The influence of the business cycle on bankruptcy probability," Discussion Papers 466, Statistics Norway, Research Department.
    3. Lin, Hsiou-Wei William & Lo, Huai-Chun & Wu, Ruei-Shian, 2016. "Modeling default prediction with earnings management," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 306-322.
    4. Enrico Supino & Nicola Piras, 2022. "Le performance dei modelli di credit scoring in contesti di forte instabilit? macroeconomica: il ruolo delle Reti Neurali Artificiali," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2), pages 41-61.
    5. Adriana Csikosova & Maria Janoskova & Katarina Culkova, 2020. "Application of Discriminant Analysis for Avoiding the Risk of Quarry Operation Failure," JRFM, MDPI, vol. 13(10), pages 1-14, September.
    6. Quader, Syed Manzur, 2017. "Differential effect of liquidity constraints on firm growth," Review of Financial Economics, Elsevier, vol. 32(C), pages 20-29.
    7. Serrano-Cinca, Carlos & Gutiérrez-Nieto, Begoña & Bernate-Valbuena, Martha, 2019. "The use of accounting anomalies indicators to predict business failure," European Management Journal, Elsevier, vol. 37(3), pages 353-375.
    8. Dean Fantazzini & Silvia Figini, 2009. "Random Survival Forests Models for SME Credit Risk Measurement," Methodology and Computing in Applied Probability, Springer, vol. 11(1), pages 29-45, March.
    9. Mitroussi, K. & Abouarghoub, W. & Haider, J.J. & Pettit, S.J. & Tigka, N., 2016. "Performance drivers of shipping loans: An empirical investigation," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 438-452.
    10. M. Naresh Kumar & V. Sree Hari Rao, 2015. "A New Methodology for Estimating Internal Credit Risk and Bankruptcy Prediction under Basel II Regime," Computational Economics, Springer;Society for Computational Economics, vol. 46(1), pages 83-102, June.
    11. Edith Navarrete Marneou & Edgar Sansores Guerrero, 2011. "Quintano Roo Mexico Micro, Small And Medium Sized Business Failure: An Multi Variable Analysis, El Fracaso De Las Micro, Pequenas Y Medianas Empresas En Quintana Roo, Mexico: Un Analisis Multivariante," Revista Internacional Administracion & Finanzas, The Institute for Business and Finance Research, vol. 4(3), pages 21-33.
    12. du Jardin, Philippe & Séverin, Eric, 2011. "Predicting corporate bankruptcy using a self-organizing map: An empirical study to improve the forecasting horizon of a financial failure model," MPRA Paper 44262, University Library of Munich, Germany.
    13. Alina Mihaela Dima & Simona Vasilache, 2016. "Credit Risk modeling for Companies Default Prediction using Neural Networks," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 127-143, September.
    14. Hyunjung Nam & Won Gyun No & Youngsu Lee, 2017. "Are Commercial Financial Databases Reliable? New Evidence from Korea," Sustainability, MDPI, vol. 9(8), pages 1-23, August.
    15. Miguel García-Posada & Juan Mora-Sanguinetti, 2014. "Are there alternatives to bankruptcy? A study of small business distress in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(2), pages 287-332, August.
    16. Agarwal, Vineet & Taffler, Richard, 2008. "Comparing the performance of market-based and accounting-based bankruptcy prediction models," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1541-1551, August.
    17. Golaszewski, Richard & Sanders, Matthew, 1991. "Financial Stress in the U.S. Airline Industry," Transportation Research Forum Proceedings 1990s 319097, Transportation Research Forum.
    18. Balcaen, Sofie & Ooghe, Hubert, 2006. "35 years of studies on business failure: an overview of the classic statistical methodologies and their related problems," The British Accounting Review, Elsevier, vol. 38(1), pages 63-93.
    19. Roman Vavrek & Ivana Kravčáková Vozárová & Rastislav Kotulič, 2021. "Evaluating the Financial Health of Agricultural Enterprises in the Conditions of the Slovak Republic Using Bankruptcy Models," Agriculture, MDPI, vol. 11(3), pages 1-19, March.
    20. Chiuling Lu & Ann Yang & Jui-Feng Huang, 2015. "Bankruptcy predictions for U.S. air carrier operations: a study of financial data," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(3), pages 574-589, July.

    More about this item

    Keywords

    Altman bankruptcy model; Zeta model; Healthcare sector; Kuwait stock exchange market (KSE); share price;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijefaa:v:11:y:2019:i:4:p:25-29. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.