Z-Score Models’ Application to Italian Companies Subject to Extraordinary Administration

It is normal for companies, during their life cycle, to alternate between positive and negative phases, periods of success and failure. When a negative period shifts from temporary to structural and chronic (and thus continues over time), the company is often destined to go bankrupt. The uncertainty regarding the exact moment when this takes place has brought about a plethora of quantitative and qualitative models aimed at predicting bankruptcy. This study applies the most well-known of these models, the Z-Score, through an application to Italian companies subject to extraordinary administration between 2000 and 2010. The results confirm a good predictive effectiveness, though Italian peculiarities could require the development of ad hoc parameters