Comparison of bankruptcy prediction models of Altman (1969), Ohlson (1980) and Zmijewski (1984) on German and Belgian listed companies between 2008-2013

Companies in all kind of fields are interested in the performance of their business. The prediction of financial soundness of a business has led to presence in many academic work and newspaper; especially in times of financial crises and economic downturns. As financial ratios are key indicators of a business performance, different bankruptcy prediction models have been created to forecast the likelihood of bankruptcy. However, a bankruptcy prediction model with high accuracy rate remains a challenge since bankruptcy prediction models are based on industries and specific samples. Therefore, the aim of this Master Thesis is to assess the accuracy rate of accounting-based bankruptcy prediction models to industries and periods outside those of original studies. The accuracy rate of three accounting-based bankruptcy prediction models of Altman (1968), Ohlson (1980), and Zmijewski (1984) were tested on German and Belgium listed companies between 2008- 2013.The accuracy rates for Belgian listed companies on Altman (1968), Ohlson (1980), and Zmijewski (1984) are 68.3 %, 68.0 % and 67.9 % whereas the accuracy rates for German listed companies on Altman (1968), Ohlson (1980), and Zmijewski (1984) are 52.1 %, 53.1 % and 52.0 %.