The risk and returns effects of corporate governance and funding strategy of banks in Ghana

Abstract

Studies employing various models in the measurement of financial distress in different markets have gained prominence in the last few decades. This study assesses the effectiveness and the generalisability of three bankruptcy prediction models, i.e., the original Altman Z-score model, Ohlson O-score model and the Zmijewski's model by using industry data from the manufacturing segment of the Nairobi Securities Exchange (NSE). The study has three objectives, i.e., to identify the financially distressed firms in the manufacturing segment, to assess whether a significant difference in bankruptcy prediction methods results existed, and to determine which of the three methods highlighted above is the most conservative in its predictions at the NSE. The study concluded by identifying a number of financially distressed and safe firms as per the method results. It was also noted that a significant difference existed in the prediction results of the three methods highlighted above with the...