Bankruptcy Risk Prediction in Ensuring the Sustainable Operation of Agriculture Companies

In recent decades, predicting company bankruptcies and financial troubles has become a major concern for various stakeholders. Furthermore, because financially sustainable businesses are affected by numerous highly complex factors, both internal and external, the situation is even more complex. This paper applies Altman’s Z-score models; more precisely, the paper applies the initial Z-score model (a model for manufacturing companies), the Z′-score model (for companies operating in emerging markets), and the Z-score bankruptcy probability calculation. Therefore, this paper offers the results of the application of different Z-score models and the calculation of bankruptcy probability on a sample of agricultural companies listed on the Belgrade Stock Exchange in the period 2015–2019. In addition, different Z-score models are used for the same sample so that the difference between their results and application can be determined. In addition, the validity of the data published in the financial statements of the respective companies was confirmed using the Beneish M-score model with five and eight variables. The results obtained by applying Altman’s Z-score model (initial and adapted to emerging markets) indicate that a certain number of companies had impaired financial stability during the observed period, i.e., that they were in danger of bankruptcy. In addition, based on the results obtained using the Beneish M-score model, it was identified that a number of companies showed signals that indicate possible fraudulent financial reporting. Further, it was found that less than half of the observed companies reported on environmental protection in their annual reports, and they did so by providing a modest amount of information. The originality and value of the paper lies in suggesting that policymakers in the Serbian emerging markets should pay more attention to the operations of companies from the observed sector, as well as to their financial and non-financial reporting. Future research should focus on comparisons with agricultural companies from the same sector whose securities are listed on stock exchanges in the region.