Firm Size as a Moderator of the Relationship Between Financial Vitality and EMS-Based Distress Classification in Energy Companies: Evidence from Serbia and Implications for Sustainable Finance

This study examines whether selected dimensions of financial vitality are associated with accounting-based Altman Emerging Market Score (EMS) distress classification and whether these associations vary by firm size among energy companies. The unbalanced panel comprises 50 Serbian firms—38 medium-sized and 12 large—and 243 firm-year observations (240 with complete data for the selected KRAS financial-vitality indicators) for 2020–2024. The empirical strategy combines logistic models with firm-clustered standard errors, generalized estimating equations (GEE), construct-overlap analysis, temporal, lagged, and leave-one-company-out validation, and a supplementary commercial-provider risk score. The main effects of K2 and S2 for medium-sized firms, as well as the effect of R1, are not statistically significant, whereas the K2 × Large and S2 × Large interactions are negative and significant in the primary and GEE models. However, these interaction findings rely on only 12 large firms and are not reproduced using the alternative risk score. They therefore indicate suggestive, criterion-sensitive heterogeneity specific to EMS-based classification rather than a general relationship with financial risk. Models excluding S1 retain moderate discriminatory performance in the validation samples. Financial vitality may enable continuity in transition investment, but it does not constitute evidence of sustainable financing.