Adapting Altman Z-score models for early warning signals: Evidence from delisted mining stocks on the Johannesburg Stock Exchange

Abstract

The aim of the study is to measure the predictive prowess of adapting the Altman’s Z-score models when used to predict financial health and subsequent delisting of mining companies listed on the Johannesburg Stock Exchange between 1994 and 2021. The study applied Altman’s Z-score models to the financials of listed mining companies to measure the adaptability of the model for predicting the financial health status of mining companies and subsequent delisting in 1-, 2- and 3-years’ time against the actual listing status of each company in the sample over corresponding time horizons. Key findings indicate that both models reliably predict delisting when the horizon is only a year in the future.