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Elisa Giacosa ORCID logo, Estela Halili, Alberto Mazzoleni ORCID logo, Claudio Teodori ORCID logo, Monica Veneziani ORCID logo


The global research stems from the relevance of the global economic crisis.
The research has several objectives: 1) to test the degree of effectiveness of the insolvency prediction models, most widely used in the literature, including recent works (Jackson and Wood, 2013), with reference to Italian manufacturing companies; 2) to modify the insolvency prediction models selected with the aim of identifying a company insolvency “alert model” which can be used by the various stakeholders; 3) to compare the effectiveness of the re-estimated models vis-à-vis the original ones. The following models were used, selected according to their diffusion and the statistical technique used: 1) Discriminant analysis: - Altman (1983), - Taffler (1983); 2) Logit Analysis: - Ohlson (1980). The study was carried out on a population of Italian companies (27,982 non-failed and 478 failed) with financial statements available for the years 2007-2012. It emerged that, the overall error of the original models, using the original cut-off points, is significant. The error is reduced for cut-off points different from those identified by the original authors. Furthermore, the new re-estimated models have an improved or identical effectiveness vis-à-vis the original models. In particular, the Ohlson re-estimated model is the one that improves most compared to the original model; however, the effectiveness of the Ohlson re-estimated model is lower than the Altman re-estimated model.

Keywords: Insolvency Prediction Models, Economic Crisis, Italian Companies, Financial Alert model

How to cite this paper: Giacosa, E., Halili, E., Mazzoleni, A., Teodori, C., & Veneziani, M. (2016). Re-estimation of company insolvency prediction models: Survey on Italian manufacturing companies. Corporate Ownership & Control, 14(1-1), 159-174.