Detecting Financial Distress of Companies listed on Amman Stock Exchange Using the Models of Altman and Jones

Abstract

This study aimed to test the capabilities of Emerging Market Score model and the modified Jones model to predict financial distress of bankrupt manufacturing companies listed on Amman stock exchange between 2003 and 2019. The most prominent result was the existence of a statistically significant effect of the Emerging Market Score in explaining the financial distress of healthy industrial companies, and the existence of a statistically significant effect of the managed earnings in explaining the financial distress of bankrupt companies. The study recommends policy makers to think of new means and methods to protect the rights of stakeholders in obtaining reliable financial statements information about their interest.