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The purpose of this study is primarily to implement the emerging market (EM) Z‐score model to predict bankruptcy and to measure the financial performance of major Islamic banks in the UAE. In addition, this study aims to introduce the Z‐score model to this industry as a beneficial diagnostic tool for possible causes standing behind the deterioration of financial performance.

The methodology that has been used in this study is based on Z‐score model for EMs developed by Altman. The related studies have proved that Z‐score has more than 80 percent accuracy and verified it is a robust tool and is useful in assessing the business performance and prediction of potential distress of firms. The approach determined in this study is to examine the financial statements of the UAE Islamic banks by calculating the EM Z‐score for the past three years and comparing it with the current year's score as an effort to measure the overall financial performance as well as the likelihood of bankruptcy of the UAE Islamic banks.

The paper finds that UAE Islamic banks should work on improving the ratios that are dragging their scores down to better understand their past performance and realize their current position in the industry; Z‐score can be adopted by the UAE Islamic banks as effective evaluation approach toward financing the potential long‐term partnership projects including small and medium business enterprises (SMEs); Z‐score model can be adapted by Islamic banks as an independent credit risk analysis approach to measure the competencies and financial strengths of potential projects; Islamic banks in the UAE are by and large financially sound and healthy and that Z‐score is a beneficial analytical tool that can be adapted by Islamic banks in the UAE to complement other financial analysis techniques to establish Islamic banking industry averages. The study also finds that the ratios used in calculating Z‐score can be considered to provide valuable instrumental indicators.

Z‐score model is a valid model to measure the performance of Islamic banks and the ratios used in calculating Z‐score can be considered to provide valuable instrumental indicators. Z‐score can be adopted by the UAE Islamic banks to finance long‐term partnership projects and SMEs. Limitations including the Islamic banking industry are still considered small size, which might has negative effect on the maximum outcomes of the study. Future studies are needed toward updating the coefficient values connected to each ratios in Z‐score model as per the inputs from the Islamic banking industry.

Z‐score model is a valid model to measure Islamic banks performance and the ratios used in calculating Z‐score can be considered to provide valuable instrumental indicators. Z‐score can be adopted by the UAE Islamic banks to finance long‐term partnership projects and SMEs.

The model is believed to widen the industry exposure in order to finance more projects and companies which is believed will reflect positively on the society welfare. By adopted Z‐score SMEs will be provided with all financings needed specially providing the microfinance for small projects.

Introducing Z‐score to the Islamic banking industry as crucial credit risk measuring tool.

This study aims to develop a model based on the financial variables for better accuracy of financial distress prediction on the sample of private French, Spanish and Italian firms. Thus, firms in financial difficulties could timely request for troubled debt restructuring (TDR) to continue business.

This study used a sample of 312 distressed and 312 non-distressed firms. It includes 60 French, 21 Spanish and 231 Italian firms in both distressed and non-distressed groups. The data are extracted from the ORBIS database. First, the authors develop a new model by replacing a ratio in the original Z”-Score model specifically for financial distress prediction and estimate its coefficients based on linear discriminant analysis (LDA). Second, using the modified Z”-Score model, the authors develop a firm TDR probability index for distressed and non-distressed firms based on the logistic regression model.

The new model (modified Z”-Score), specifically for financial distress prediction, represents higher prediction accuracy. Moreover, the firm TDR probability index accurately depicts the probabilities trend for both groups of distressed and non-distressed firms.

The findings of this study are conclusive. However, the sample size is small. Therefore, further studies could extend the application of the prediction model developed in this study to all the EU countries.

This study has important practical implications. This study responds to the EU directive call by developing the financial distress prediction model to allow debtors to do timely debt restructuring and thus continue their businesses. Therefore, this study could be useful for practitioners and firm stakeholders, such as banks and other creditors, and investors.

This study significantly contributes to the literature in several ways. First, this study develops a model for predicting financial distress based on the argument that corporate bankruptcy and financial distress are distinct events. However, the original Z”-Score model is intended for failure prediction. Moreover, the recent literature suggests modifying and extending the prediction models. Second, the new model is tested using a sample of firms from three countries that share similarities in their TDR laws.

The literature has revealed auditors' going concern risk disclosures are examined in research as a homogenous risk class. This is despite the various going concern modifications auditors are entitled to give pertaining to this issue. A five‐level risk class is established in this paper derived from Australian Auditing Standard pronouncements to examine the appropriateness of auditors' going concern reporting relating specifically to the likelihood of firm failure.

Time is necessary to reveal the appropriateness of going concern reporting therefore a longitudinal research methodology was adopted. The research focuses on all Australian listed companies within the building industry in 1989 and follows all of the reporting of going concern by auditors and directors through until 2007. The building industry was selected because of its volatility, which increased the possibility of going concern reporting allowing a more in‐depth focus in the research. All auditors' going concern modifications were examined along with all indications of going concern problems identified by directors. To properly investigate the appropriateness of auditors' reporting, all sampled audit reports were examined using Altman's Z‐score model which were matched with a risk class model using the relevant requirements to report in order to determine the appropriateness of the auditors' and directors' opinions.

The level of under reporting of going concern risk by auditors (75 per cent) implies they are more affected by the agency relationship found in literature than directors who are found to have an incidence of underreporting of 57 per cent.

Literature classifies auditors along with directors as part of the agency problem. Altman's Z‐score bankruptcy prediction model is used because of its enduring nature, reliability and ability to be externally calculated to independently compare the going concern reporting performance of auditors and directors as part of the contribution to this research area.

The paper for the first time examines going concern reporting at a multi‐risk level rather than the binomial level used in research previously. The approach is developed in this paper using auditing pronouncements. These risk levels are linked with an independent measure being the Altman Z‐score to determine the appropriateness of auditors' and directors' reporting of going concern issues.

The purpose of this paper is to examine the optimal leverage ratio, speed of adjustment, and which factors contribute to achieving the target of selected telecom companies in a partial adjustment framework from 2008 to 2017. Further is to analyze the likelihood of bankruptcy of sample companies by Altman Z-Score model and to suggest which theory of capitals structure is better in explaining leverage strategies and judicious mix of debt and equity structure of the selected telecom companies.

This paper chooses a partial adjustment model and uses the generalized method of moments technique to identify the variables that influence the target leverage ratio and the factors that influence the speed at which the target leverage is adjusted. Second, the Altman Z-score model is used in this paper to research the financial status of telecom companies using financial instruments and techniques.

For Indian telecom firms, firm-specific variables such as profitability, NDTS and Z-score lead to greater debt adjustment towards optimal level target leverage. The paper also highlights new paradigms in the Indian telecom sector, stating that top market leaders such as Bharti Airtel, BSNL, Idea, Vodafone and R.com, among others, should focus on debt reduction and interest payments, as well as implement new strategies to solve the crisis and change financial policies.

It mainly focuses on firm-specific variables because the firm-specific variables affect the leverage framework. The country-specific variables are not taken into the study. These results may be unique to telecom companies due to some peculiarities existing in the telecom sector in India. Although other sectors, both national and international level, can be taken into consideration.

This paper has ramifications for corporate executives, investors and policymakers in India, for example, in terms of considering different transition costs while changing a telecom company’s financing decisions.

To the best of the authors’ knowledge, this is the first paper of its kind to look at both financial and econometric tools to assess financial performance using the Altman Z-Score model, as well as decide leverage strategies and the pace with which they can be adjusted to target leverage in the context of Indian telecom companies.

Sustainability is essential to the ongoing operations of banks, though it is much less clear how Islamic corporate governance (ICG) promotes economic sustainability (ES) and thereby prevents bankruptcy. To explore the unexplored, this study aims to examine the efficacy of ICG in preventing bankruptcy and enhancing the ES of Islamic banks operating in Pakistan.

The current study measures ES through Altman's Z-score to analyze the level of the industry's stability and consequently examines the effect of ICG on the ES of Islamic banks in Pakistan for the post-financial-crises period. Using the country-level data, this study utilized a fixed-effect model and two-stage least squares (2SLS) techniques on balanced panel data spanning from 2009 to 2020 to provide empirical evidence.

The empirical results unveiled that board size and meetings have a significant positive influence on the ES while managerial ownership demonstrated an unfavorable effect on ES. Interestingly, the insignificant effect of women directors became significant with the inclusion of controlled variables. Overall, the findings indicate that ICG is an efficient tool for promoting ES in Islamic banks and preventing them from the negative effects of emerging crises.

The findings provide concrete insights for policymakers, regulators and other concerned stakeholders to execute a sturdy corporate governance system that not only oversees the economic, social and ethical aspects but also provides measures to alleviate the impacts of potential risks like the COVID-19 pandemic.

Examining the role of ICG in alleviating bankruptcy risk is an informative and useful endeavor for all social actors.

To the best of the authors’ knowledge, this study is one of the first efforts to provide evidence-based insights on the role of ICG in preventing bankruptcy and offers a potential research direction for ES.

The increasing incidence of fraudulent financial reporting by firms in recent years raises concerns about investors' confidence in capital markets. Academicians and industry practitioners adopt diverse risk management techniques to detect fraudulent reporting of financial statements. This paper aims to determine the effectiveness of the Beneish M-score and Altman Z-score models for the early detection of material misstatements at Comscore, Inc., a media analytics firm in the United States of America.

The financial statements of Comscore Inc. from 2012 to 2018 were analyzed with the primary objective of early fraud detection by employing the Beneish M-score and the Altman Z-score.

The study’s outcomes indicate that the Beneish M-score is less predictable in fraud detection compared to the Altman Z-score. The study results did not confirm the efficacy of the Beneish model in predicting fraudulent financial statements. The study concludes that the choice of forensic tool greatly influences fraud detection outcomes.

The research findings can guide the policy decision-making of investors, financial auditors, and forensic auditors as this study provides some evidence of the effectiveness of forensic tools in the detection of financial statement fraud in corporate entities.

This is the first study to apply these two widely used tools to the most recent big corporate scandal: Comscore, Inc.

This paper aims to measure the stability extent of the banking sector in Saudi Arabia, including Islamic and conventional banks (CBs), using quarterly data.

The paper uses seemingly unrelated regressions to estimate the determinants of the z-score.

The panel data model shows that Islamic banks (IBs) reduce the financial stability index relatively; meanwhile, they contribute efficiently to enhance the financial stability through the diversification of their assets. The Saudi banking sector exhibits strong concentration affecting the financial stability negatively.

The paper’s topic can be extended to cover the recent period.

The limited presence of IBs in the Saudi banking sector jeopardizes any effort to improve the financial stability.

By attracting more clients, IBs would contribute more to the financial stability in the Saudi economy. Also, the monetary authority has to expand the share of IBs in the financial system at least 50-50 compared to CBs.

The z-score is mostly analyzed with yearly data; in this paper we use quarterly data to describe at infra-annual frequency the variability of the z-score index. Also, we consider in detail the statistical properties of the banks’ data.

Remuneration policies may differ from country to country, and their effect on bank stability could be due to the legal framework. Therefore, this study aims to investigate how the legal system impacts the relationship between CEO compensation and bank stability across countries.

To test the study hypotheses, the authors use panel data of 74 banks operating in ten OECD countries during the period 2009–2016 and apply the generalized moments method regression model to better remediate the endogeneity problem.

The findings confirm that a country’s banking regulations significantly affect its bank stability. Common law countries have less bank stability than civil law countries. This result can be interpreted by the fact that, in common-law countries, banks’ CEO are strongly protected by the law, so they allocate a large part of bank assets to risky loans to improve their variable remuneration.

The research can help policymakers understand bank stability in one country. Any legal reform would require prior knowledge of how risk-taking may arise in executive compensation.

The contribution is to explain the controversial effect of executive compensation on bank stability in the framework of legal theory. The authors argue that regulators should monitor compensation structures and that the country’s legal origin of law shapes the CEO compensation structure and is a determinant of bank stability. To the best of the authors’ knowledge, there are no studies exploring this field. So, this study tries to shed more light on the dark side of CEOs’ behavior when undertaking risky projects to maximize their remuneration.

Financial bankruptcy is inevitable in the tourism and hospitality ecosystem. Despite the pertinence of tourism and hospitality businesses going into bankruptcy, limited studies have investigated the early warning signs and likelihood of a financial bankruptcy occurring in tourism and hospitality firms. This study examined the predictive value of financial ratios as potential indicators in predicting bankruptcy among tourism and hospitality firms.

Altman's z-score bankruptcy prediction model was applied through five key financial ratios to predict bankruptcy of the Thomas Cook Travel Group over a ten year period (2008–2018).

The key findings of this study strongly suggest that besides the size and location of the firm, financial ratios are reliable predictors and play a pivotal role in predicting the bankruptcy of a tourism and hospitality business.

The paper provides key stakeholders to adopt checks and balances to identify financial distressed tourism firms through financial ratios.

This is the first academic paper to inspect the financial history of Thomas Cook Travel Group in a financial ratio context, particularly following the bankruptcy of the firm in 2019.

The purpose of this paper is to examine the relationship between corporate governance and financial stability of the Islamic banking institutions in Malaysia. Indeed, we do not know much about the relationship between the corporate governance variables and the financial stability of the Islamic banks (IBs) in Malaysia.

In this case, the level of bank stability is individually measured using the Z-score indicator. The corporate governance dimension in this study includes the Shari’ah board size (SBS) in addition to the size of board members and the proportion of independent directors in the board. Using a yearly bank-level data of 16 IBs in Malaysia from 2005 to 2015, this paper utilizes the fixed effect, the GLS random-effect models and the OLS methods to provide empirical evidences. Moreover, this work aims to focus on the country-level data of Malaysia’s banking sector and introduced the corporate governance variables in this model.

To the authors’ knowledge, this is the first empirical analysis of country-level data in the Malaysia’s banking industry with this research approach. The study found that the percentage of independent members in the board of directors has a significant positive impact on the financial stability of the IBs. However, the SBS and the size of board are found to have no influence toward financial stability.

With this paper, the authors hope to clarify the relationship between corporate governance and financial stability of the Islamic banking, and provide additional insights to the emerging literature of Islamic banking.