Research Article
BibTex RIS Cite

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

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

References

  • Acosta-Gonzalez, E. and F. Fernandez-Rodrıguez, “Forecasting Financial Failure ofFirms via Genetic Algorithms,” Computational Economics 43 (2014), pp. 133–157.
  • Aliakbari, S. (2009). Prediction of corporate bankruptcy for the UK firms in manufacturing industry. Brunel University.
  • Aksoy, Ahmet; (1993), İşletme Sermayesi Yönetimi, Gazi Büro Kitabevi, Ankara.
  • Allayannis, G., Brown, G. W., &Klapper, L. F. (2003). Capital structure and financial risk: Evidence from foreign debtuse in East Asia. Journal of Finance, 58(6), 2667–2709.
  • Altman, Edward I.; (1968), “Financial Ratios, Discriminant Analysis and Prediction of Corporate Bankruptcy”, Journal of Finance, 23(4), pp. 589-609.
  • Altman, Edvard (1971), Bankruptcy In America, D.C. Heathand Company, Lexington.
  • Altman, Edward I.; (2000) “Predicting Financial Distress of Companies: Revisiting the Z-Score and Zeta® Models”, Working Paper.
  • Altman, E. I. (2002). Bankruptcy, credit risk, and high yield junk bonds: a compendium of writings. Oxford: Blackwell Publishing.
  • Altman, E. I., Drozdowska M. I., Laitinen, E. K., and Suvas A. (2014). Distressed Firm and Bankruptcy Prediction in A International Context: A Review and Empirical Analysis of Altman’s Z Score Model.
  • Altman, E. I., Drozdowska M. I., Laitinen, E. K., and Suvas A. (2017). Distressed Firm and Bankruptcy Prediction in A International Context: A Review and Empirical Analysis of Altman’s Z Score Model. Journal of International Financial Management & Accounting 28:2 2017
  • Aziz, M. Adnan, Dar, Humayon A., Predicting corporate bankruptcy: where we stand? Corporate Governance ISSN: 1472-0701, Publication date: 1 January 2006
  • Bartol, Kathryn K. / Nartin, C. D.(1991), Management (New York: McGraw-HillInc.).
  • Blum, M. P. (1974). Failing company discriminant analysis. Journal of Accounting Research, 12 (1), 1-25.
  • Çelik, K. M. (2010). Bankaların Finansal Başarısızlıklarının Geleneksel ve Yeni Yöntemlerle Öngörüsü. Celal Bayar Üniversitesi Yönetim ve Ekonomi Dergisi, 17 (2), 129-143.
  • Dağlı, Hüseyin (1994), “İşletme Başarısızlıkları ve Alınması Gerekli Önlemler”, Verimlilik Dergisi, MPM Yayınları, Sayı:1, Ankara.
  • Deakin, E. B. (1977). Business failure prediction: An empirical analysis. In E. Altman, & A. Sametz (Eds.), Financial crises: Institutions and markets in a fragile environment. New York: John Wiley.
  • Edmister R. (1972), An Empirical Test of Financial Ratio Analysis for Small Business Failure Prediction; Journal of financial and quantitative analysis, 7(2), 1477-1493.
  • Evin, K. (2014). İşletmelerde Finansal Risk Yönetimi Ve İmkb'de İşlem Gören Çimento Şirketine Yönelik Bir Uygulama, Yüksek Lisans Tezi, Okan Üniversitesi SosyalBilimler Enstitüsü İşletme Anabilim Dalı. İstanbul.
  • Jawabreh, O. A., Al Rawashdeh, F. & Senjelawi, O. (2017). Using Altman's Z-Score model to predict the financial failure of hospitality companies-case of Jordan. International Journal of Information, Business and Management, 9(2), 141-157.
  • Karaca, S. & Özen, E. (2017). Financial failure estimation of companies in BIST tourism index by Altman Model and its effect on market prices. BRAND. Broad Research in Accounting, Negotiation, and Distribution, 8(2), 11-23.
  • Gönenli, Atilla (1988), Finansal Yönetim, İstanbul Üniversitesi Yayınları, No:3463, İstanbul.
  • Kulalı, İ. (2016). Altman Z-Score Modelinin BİST Şirketlerinin Finansal Başarısızlık Riskinin Tahmin Edilmesinde Uygulanması. Uluslararası Yönetim İktisat ve İşletme Dergisi, 12(27), 283-292.
  • Kwak, W., Shi, Y., J.J. Cheh and H. Lee. “Multiple Criteria Linear Programming DataMining Approach: An Application for Bankruptcy Prediction,” Data Mining andKnowledge Management 3327 (2005), pp. 164–173.
  • Merkevicius, E., Garsva, G. and S. Girdzijauskas “A Hybrid SOM-Altman Model forBankruptcy Prediction,” International Conference on Computational Science 3994(2006), pp. 364– 371.
  • Meyer,N. & Meyer, D. (2015). The role and impact of tourism on local economic development: A comparative study, African Journal for Physical Health Education, Recreation and Dance, 21; 197-214.
  • Ohlson, J. (1980). Financial ratios and probabilistic prediction of bankruptcy. Journal of Accounting Research, 18 (1), 109-131. Orhan, S., & Abdullah, S. (2015, nisan). Finansal Başarısızlığın Oran Analizi ve Diskriminat Analizi Kullanılarak Ölçümlenmesi: Bist'de İşlem Gören Dokuma, Giyim Eşyası Ve Deri İşletmeleri Üzerine Bir Araştırma. Muhasebe Ve Finansman .
  • Pindado, J., Rodrigues, L. and C. de la Torre. “Estimating Financial Distress Likeli-hood,” Journal of Business Research 61 (2008), pp. 995–1003.Reen, Bill (1990), Finansal Analysis, PrenticeHall, U.K.
  • Reisz, A.S. and C. Perlich, “A Market-Based Framework for Bankruptcy Prediction,”Journal of Financial Stability 3 (2007), pp. 85–131.
  • Sestayo, Rubén Lado, González, Luis Otero, Búa, Milagros Vivel, Cunill, OnofreMartorell “Impact of location on profitability in the Spanish hotel sector”Tourism Management Volume 52, February 2016, Pages 405-415
  • Taffler, C. (2011). Alternative Financial Ratios As Predictors Of Failure. Accounting Review XLIII, 113-122.
  • Thai, S. B., Goh, H. H, HengTeh, B., Wong, J.C. and Ong T. S. (2014). A Revisited of Altman Z- Score Model for Companies Listed in Bursa Malaysia. International Journal of Business and Social Science, 5 (12), 197-207.
  • Tinoco, M. and N. Wilson, “Financial Distress and Bankruptcy Prediction AmongListed Companies Using Accounting, Market and Macroeconomic Variables,” Inter-national Review of Financial Analysis 30 (2013), pp. 394–419.
  • Türk Z. ve Kürklü E.,(2017). Osmaniye Korkut Ata Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 1(1), 1-14.
  • Uzun, E. (2005). İşletmelerde Finansal Başarısılığın Teorik Olarak İrdelenmesi. Muhasebe ve Finansman Dergisi (27).
  • Xu, M. and C. Zhang, “Bankruptcy Prediction: The Case of Japanese Listed Compa-nies,” Review of Accounting Studies 14 (2009), pp. 534–558.
  • Wu, Y., Gaunt, C. and S. Gray. “A Comparison of Alternative Bankruptcy PredictionModels,” Journal of Contemporary Accounting and Economics 6 (2010), pp. 34–45.
  • Zeytinoglu, E.,& Akarım, Y. D. (2013). Financial failurepredictionusingfinancialratios: an empiricalapplication on IstanbulStock Exchange. Journal of Applied Finance &Banking, 3(3), 107-116.
  • Zhang, L., Altman, E.I. and J. Yen. “Corporate Financial Distress Diagnosis Modeland Application in Credit Rating for Listing Firms in China,” Frontiers of Computer Science in China, 4 (2010), pp. 220–236.
  • Zmijewski, M.E. (1984). Methodological Issues Related to Estimation of Financial Distress Prediction Models. Journal of Accounting Research, 22(1), 59-82.
  • https://intes.org.tr/wp-content/uploads/2018/11/SEKT%C3%96R-RAPORU.pdf
  • https://assets.kpmg/content/dam/kpmg/tr/pdf/2018/01/sektorel-bakis-2018-insaat.pdf
  • https://assets.kpmg/content/dam/kpmg/tr/pdf/2019/01/sektorel-bakis-2019-insaat.pdf

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

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

References

  • Acosta-Gonzalez, E. and F. Fernandez-Rodrıguez, “Forecasting Financial Failure ofFirms via Genetic Algorithms,” Computational Economics 43 (2014), pp. 133–157.
  • Aliakbari, S. (2009). Prediction of corporate bankruptcy for the UK firms in manufacturing industry. Brunel University.
  • Aksoy, Ahmet; (1993), İşletme Sermayesi Yönetimi, Gazi Büro Kitabevi, Ankara.
  • Allayannis, G., Brown, G. W., &Klapper, L. F. (2003). Capital structure and financial risk: Evidence from foreign debtuse in East Asia. Journal of Finance, 58(6), 2667–2709.
  • Altman, Edward I.; (1968), “Financial Ratios, Discriminant Analysis and Prediction of Corporate Bankruptcy”, Journal of Finance, 23(4), pp. 589-609.
  • Altman, Edvard (1971), Bankruptcy In America, D.C. Heathand Company, Lexington.
  • Altman, Edward I.; (2000) “Predicting Financial Distress of Companies: Revisiting the Z-Score and Zeta® Models”, Working Paper.
  • Altman, E. I. (2002). Bankruptcy, credit risk, and high yield junk bonds: a compendium of writings. Oxford: Blackwell Publishing.
  • Altman, E. I., Drozdowska M. I., Laitinen, E. K., and Suvas A. (2014). Distressed Firm and Bankruptcy Prediction in A International Context: A Review and Empirical Analysis of Altman’s Z Score Model.
  • Altman, E. I., Drozdowska M. I., Laitinen, E. K., and Suvas A. (2017). Distressed Firm and Bankruptcy Prediction in A International Context: A Review and Empirical Analysis of Altman’s Z Score Model. Journal of International Financial Management & Accounting 28:2 2017
  • Aziz, M. Adnan, Dar, Humayon A., Predicting corporate bankruptcy: where we stand? Corporate Governance ISSN: 1472-0701, Publication date: 1 January 2006
  • Bartol, Kathryn K. / Nartin, C. D.(1991), Management (New York: McGraw-HillInc.).
  • Blum, M. P. (1974). Failing company discriminant analysis. Journal of Accounting Research, 12 (1), 1-25.
  • Çelik, K. M. (2010). Bankaların Finansal Başarısızlıklarının Geleneksel ve Yeni Yöntemlerle Öngörüsü. Celal Bayar Üniversitesi Yönetim ve Ekonomi Dergisi, 17 (2), 129-143.
  • Dağlı, Hüseyin (1994), “İşletme Başarısızlıkları ve Alınması Gerekli Önlemler”, Verimlilik Dergisi, MPM Yayınları, Sayı:1, Ankara.
  • Deakin, E. B. (1977). Business failure prediction: An empirical analysis. In E. Altman, & A. Sametz (Eds.), Financial crises: Institutions and markets in a fragile environment. New York: John Wiley.
  • Edmister R. (1972), An Empirical Test of Financial Ratio Analysis for Small Business Failure Prediction; Journal of financial and quantitative analysis, 7(2), 1477-1493.
  • Evin, K. (2014). İşletmelerde Finansal Risk Yönetimi Ve İmkb'de İşlem Gören Çimento Şirketine Yönelik Bir Uygulama, Yüksek Lisans Tezi, Okan Üniversitesi SosyalBilimler Enstitüsü İşletme Anabilim Dalı. İstanbul.
  • Jawabreh, O. A., Al Rawashdeh, F. & Senjelawi, O. (2017). Using Altman's Z-Score model to predict the financial failure of hospitality companies-case of Jordan. International Journal of Information, Business and Management, 9(2), 141-157.
  • Karaca, S. & Özen, E. (2017). Financial failure estimation of companies in BIST tourism index by Altman Model and its effect on market prices. BRAND. Broad Research in Accounting, Negotiation, and Distribution, 8(2), 11-23.
  • Gönenli, Atilla (1988), Finansal Yönetim, İstanbul Üniversitesi Yayınları, No:3463, İstanbul.
  • Kulalı, İ. (2016). Altman Z-Score Modelinin BİST Şirketlerinin Finansal Başarısızlık Riskinin Tahmin Edilmesinde Uygulanması. Uluslararası Yönetim İktisat ve İşletme Dergisi, 12(27), 283-292.
  • Kwak, W., Shi, Y., J.J. Cheh and H. Lee. “Multiple Criteria Linear Programming DataMining Approach: An Application for Bankruptcy Prediction,” Data Mining andKnowledge Management 3327 (2005), pp. 164–173.
  • Merkevicius, E., Garsva, G. and S. Girdzijauskas “A Hybrid SOM-Altman Model forBankruptcy Prediction,” International Conference on Computational Science 3994(2006), pp. 364– 371.
  • Meyer,N. & Meyer, D. (2015). The role and impact of tourism on local economic development: A comparative study, African Journal for Physical Health Education, Recreation and Dance, 21; 197-214.
  • Ohlson, J. (1980). Financial ratios and probabilistic prediction of bankruptcy. Journal of Accounting Research, 18 (1), 109-131. Orhan, S., & Abdullah, S. (2015, nisan). Finansal Başarısızlığın Oran Analizi ve Diskriminat Analizi Kullanılarak Ölçümlenmesi: Bist'de İşlem Gören Dokuma, Giyim Eşyası Ve Deri İşletmeleri Üzerine Bir Araştırma. Muhasebe Ve Finansman .
  • Pindado, J., Rodrigues, L. and C. de la Torre. “Estimating Financial Distress Likeli-hood,” Journal of Business Research 61 (2008), pp. 995–1003.Reen, Bill (1990), Finansal Analysis, PrenticeHall, U.K.
  • Reisz, A.S. and C. Perlich, “A Market-Based Framework for Bankruptcy Prediction,”Journal of Financial Stability 3 (2007), pp. 85–131.
  • Sestayo, Rubén Lado, González, Luis Otero, Búa, Milagros Vivel, Cunill, OnofreMartorell “Impact of location on profitability in the Spanish hotel sector”Tourism Management Volume 52, February 2016, Pages 405-415
  • Taffler, C. (2011). Alternative Financial Ratios As Predictors Of Failure. Accounting Review XLIII, 113-122.
  • Thai, S. B., Goh, H. H, HengTeh, B., Wong, J.C. and Ong T. S. (2014). A Revisited of Altman Z- Score Model for Companies Listed in Bursa Malaysia. International Journal of Business and Social Science, 5 (12), 197-207.
  • Tinoco, M. and N. Wilson, “Financial Distress and Bankruptcy Prediction AmongListed Companies Using Accounting, Market and Macroeconomic Variables,” Inter-national Review of Financial Analysis 30 (2013), pp. 394–419.
  • Türk Z. ve Kürklü E.,(2017). Osmaniye Korkut Ata Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 1(1), 1-14.
  • Uzun, E. (2005). İşletmelerde Finansal Başarısılığın Teorik Olarak İrdelenmesi. Muhasebe ve Finansman Dergisi (27).
  • Xu, M. and C. Zhang, “Bankruptcy Prediction: The Case of Japanese Listed Compa-nies,” Review of Accounting Studies 14 (2009), pp. 534–558.
  • Wu, Y., Gaunt, C. and S. Gray. “A Comparison of Alternative Bankruptcy PredictionModels,” Journal of Contemporary Accounting and Economics 6 (2010), pp. 34–45.
  • Zeytinoglu, E.,& Akarım, Y. D. (2013). Financial failurepredictionusingfinancialratios: an empiricalapplication on IstanbulStock Exchange. Journal of Applied Finance &Banking, 3(3), 107-116.
  • Zhang, L., Altman, E.I. and J. Yen. “Corporate Financial Distress Diagnosis Modeland Application in Credit Rating for Listing Firms in China,” Frontiers of Computer Science in China, 4 (2010), pp. 220–236.
  • Zmijewski, M.E. (1984). Methodological Issues Related to Estimation of Financial Distress Prediction Models. Journal of Accounting Research, 22(1), 59-82.
  • https://intes.org.tr/wp-content/uploads/2018/11/SEKT%C3%96R-RAPORU.pdf
  • https://assets.kpmg/content/dam/kpmg/tr/pdf/2018/01/sektorel-bakis-2018-insaat.pdf
  • https://assets.kpmg/content/dam/kpmg/tr/pdf/2019/01/sektorel-bakis-2019-insaat.pdf
There are 42 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Makaleler
Authors

Samuray Karaca 0000-0001-7702-1545

Ahmet Karaca 0000-0001-8556-7337

Publication Date May 31, 2020
Acceptance Date May 21, 2020
Published in Issue Year 2020 Volume: 4 Issue: 2

Cite

APA Karaca, S., & Karaca, A. (2020). Estimation of the Bankruptcy Risk of the Companies in the BIST Construction Index. Alanya Akademik Bakış, 4(2), 205-222. https://doi.org/10.29023/alanyaakademik.648125