CONTROVERSIES REGARDING THE UTILIZATION OF ALTMAN MODEL IN ROMANIA

• Main Authors: Mihaela ONOFREI, Dan LUPU
• Format: Article
• Language: English
• Published: Technopress 2012-06-01
• Series: Journal of Public Administration, Finance and Law
• Subjects: bankruptcy; prediction model; BSE
• Online Access: http://www.jopafl.com/uploads/CONTROVERSIES-REGARDING-THE-UTILIZATION-OF-ALTMAN-MODEL-IN-ROMANIA.pdf

Altman model was built for U.S. companies, based on the characteristics of that economy. Promising results were obtained in other countries such as Britain, Australia, Canada, Finland, Germany, Israel, Norway, India, South Korea; the percentage is over 80% predictability. However, as can be seen, they have an Anglo-Saxon legal system and also the economic environment is highly developed. While there is no reason why this model can be applied to companies in the whole world, we recognize that each has its own peculiarities economic environment, therefore, local models forecast could be better than American models, at least in their testing phase. But the utilization of Altman model is suitable for the Romanian economy? Taking this into account, the purpose of this paper is to test the Altman model on the Romanian market.