Altman Z-Score Models and predicting financial distress: Empirical study of delisted mining stocks on the Johannesburg Stock Exchange

The aim of the study is to measure the predictive prowess of Altman's Z-score models when used to predict financial health and subsequent delisting of mining and metal companies listed on the Johannesburg Stock Exchange (JSE) from 1994 till 2021. The study applied the Altman's Z-score model as well as the Z double prime model to the financials of JSE listed mining companies to measure the predicted status of companies in a year, two years', and three years' time against the actual listing status of each company in the sample over the corresponding time horizons. Key findings indicate that both models reliably predict delisting of mining companies on the JSE when the horizon is only a year in the future. Additional analysis shows that individual factors of the model may not necessarily be a proxy for the Zscores and that the entire model needs to be considered in its entirety as a measure of financial health. Key words: Mining, Altman Z-Score models, Financial health, Financial distress, Delisting, Johannesburg Stock Exchange.

Grantor

Department of Finance and Tax

Year dc:date.issued

2023

Author dc:creator

• Matanga, Nigel

Advisor dc:contributor.advisor

• Holman, Glen

• Finance and Tax

Handle dc:identifier.uri

http://hdl.handle.net/11427/40347

OAI identifier oai:identifier

oai:open.uct.ac.za:11427/40347