What determines financial soundness of Croatian listed firms?

After the financial crisis of 2008, the financial soundness of the firms has gained a lot of attention from the regulators, academicians, the public etc. Therefore, the authors wanted to investigate the factors that determine financial soundness of companies. The analysis is conducted on the sample of companies across different sectors, both financial and non-financial, whose shares are listed at the official market of Zagreb Stock Exchange (ZSE). The timeframe of the analysis covers 2014-2018 period. The influence of different companyspecific variables on companies’ soundness was analysed including size of the company based on total assets, earnings per employee, expense ratio, sales growth and age of the company while the soundness of the firm was measured with Z-score, an accounting based measure of distance to default. The static panel model has been employed. The results of the analysis suggest that age of the company positively affects soundness whereas other variables are not playing significant role in determining soundness of Croatian listed firms.