Estimation of the Bankruptcy Risk of the Companies in the BIST Construction Index

Year 2020, Volume: 4 Issue: 2, 205 - 222, 31.05.2020

Samuray Karaca , Ahmet Karaca

https://doi.org/10.29023/alanyaakademik.648125

Abstract

In this study, it is aimed to measure the effects of the recent négative developments in the Turkish Construction sector on the financial failures of the companies in Borsa Istanbul Construction Index. This study is particularly important with regard to determining whether the concordat announcements, which started especially in the 3rd quarter of 2018, carry a risk for the construction sector and ascertaining whether there have been any warnings beforehand.
The financial statements of the companies in the construction sector in 2010-2018 period will be analyzed with the Altman Z score model to see if they carry bankruptcy risk. In addition, by comparing the calculated Z scores with the stock prices of stock certificates, the extent to which the probabilities of bankruptcy are priced in the stock market will also be measured.
Predicting bankruptcy risk is vital for both firms and stakeholders. The findings will contribute significantly to strategy determination for firms and investors in this sector. On the other hand, the results will also guide investors' stock preferences.

Keywords

Altman Z Model, Probability of Bankruptcy, Borsa Istanbul, Construction Index

Estimation of the Bankruptcy Risk of the Companies in the BIST Construction Index

Abstract

In this
study, it is aimed to measure the effects of the recent négative developments
in the Turkish Construction sector on the financial failures of the companies
in Borsa Istanbul Construction Index. This study is particularly important with
regard to determining whether the concordat announcements, which started
especially in the 3rd quarter of 2018, carry a risk for the construction sector
and ascertaining whether there have been any warnings beforehand.

The
financial statements of the companies in the construction sector in 2010-2018
period will be analyzed with the Altman Z score model to see if they carry
bankruptcy risk. In addition, by comparing the calculated Z scores with the
stock prices of stock certificates, the extent to which the probabilities of
bankruptcy are priced in the stock market will also be measured.

Predicting bankruptcy risk is vital for both firms and
stakeholders. The findings will contribute significantly to strategy
determination for firms and investors in this sector. On the other hand, the
results will also guide investors' stock preferences.

Keywords

Altman Z Model, Probability of Bankruptcy, Borsa Istanbul, Construction Index

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