பொருளாதாரம் மற்றும் மேலாண்மை அறிவியல் சர்வதேச இதழ்

Exploring the Financial Performance of the Listed Companies in Kuwait Stock Exchange Using Altman's Z-Score Model

Abstract

Payal Chadha

A quantitative method was used to explore the financial performance of the listed firms on the Kuwait Stock Exchange. The number of firms explored was 196 out of a possible 206 (two firms are subsidiaries of one of the firm, and others are insurance firms excluded). The listed firms were observed from 2009-2014 to understand their status in the market, and the direction they are headed towards. The financial data were gathered from the published annual reports of the respective firms and the financial statements from the Kuwait Stock Exchange website. The results, using the Altman Z-score model for the period 2009-2014, show that approximately 39.46% of the firms on average were safe; approximately 25.94% of the firms on average were distressed; approximately 15.90% of the firms on average were in a grey area; and approximately 18.71% firms on average had no available data. The bankruptcy rate could not be justified using the Zmijewski score model due to the inconclusive results and the absence of bankruptcy laws in the State of Kuwait. This paper provides insight into the financial distress level in Kuwait. The level of distress shows that major changes are necessary within firms and operations are not running smooth. Bankruptcy laws are required for firms operating in distress. This exploration is a stepping-stone for potential investors by showing the most profitable sectors for investment and for future researchers to predict accurate bankruptcy rates in the State of Kuwait.