Industry Specifics of Models Predicting Financial Distress

This paper focuses on scoring methods predicting corporate default. There exist many tools for the estimation of future distress or bankruptcy. Traditional research usually analyzes the accuracy of the methods and recommends which tools should be used. Although this paper examines existing scoring models, the research idea is different. The aim of the paper is to examine whether belonging to an industry branch influences the results of the models. The models are mainly used generally, without respect to the industry branches. However, companies belonging to different industries can reach different performance. Scoring approaches are based on performance expressed by financial ratios such as profitability, activity, liquidity, and leverage. Therefore, it could be assumed that the final values of the models would be affected. The paper focuses on three industry branches—construction, manufacture of fabricated metal products, and manufacture of machinery. The research idea is tested on four data subsamples consisting of healthy and insolvent companies and describing different time periods. The final values of the models for the individual companies are summed up by descriptive statistics. The gained results show that in specific economic circumstances there are significant differences for the different industries.