Corporate Failure Prediction of Public Listed Companies in Malaysia

Abstract

This paper aims to extent the prediction model of financial distress among Malaysian public listed companies from period 2006 to 2010. Altman Z-Score Models was used to identify classification on three main zones which are safe, grey or distress zone. The results specify that 56 % of listed companies were classified as ‗distress zone‘, 24 % are known as ‗grey zone‘ while 20 % are classified in ‗safe zone‘. Two likely to fail companies was correctly predict at distress zone which Z-Score was lower than 1.81. Moreover, the findings show most of the companies were facing financial distress during global financial crisis on 2008. Industrial transportation and industrial engineering sectors are generally classified as ‗safe zone‘ while food and staplers retailing, real estate investment and services and industrial metals and mining sectors are classified as ‗distress zone‘.