Financial Failure Estimation of Companies in BIST Tourism Index by Altman Model and its Effect on Market Prices

Abstract

In this study, it is aimed to measure the negative effects of recent developments in the Turkish tourism sector on the financial failures of companies on Istanbul Stock Exchange tourism index. Financial tables of companies in the tourism sector during 2009-2016 period were analyzed with Altman Z Score Model and it was researched whether they carry the of bankruptcy risk or not. However, the exchange prices of the stocks are compared with the calculated Z scores and the probability of bankruptcy that was measured to what extent the priced in the exchange.

Result of analyzes show that the problems occurred in 2015-2016 years increased tourism companies' bankruptcy risk. In this period, there was no significant change in stock prices of companies in general. Panel data regression analysis results also did not provide evidence for the existence of a statistically significant relationship between the likelihood of bankruptcy and its effect on prices.

Predicting the risk of bankruptcy is of vital importance for both companies and shareholders. Findings will make a significant contribution in determining strategy for companies in this sector. The results from the other side will also guide investors on their share preferences.

Keywords: Altman Z Model, Probability of Bankruptcy, Borsa Istanbul, BIST, Tourism Index.