Determinants of the occurrence of financial distress in medium-sized and big public joint-stock companies

Forecasting financial distress in companies is very significant bearing in mind the complexity and dynamics of the modern business environment. Accordingly, the subject matter of this research study is the determinants of the occurrence of the financial distress that may lead a company to bankruptcy. The study is aimed at determining the interdependence (correlation) between certain determinants of the occurrence of financial distress and the indicators of the probability of the occurrence of financial distress and considering the difference in the probability of the occurrence of financial distress before and after the onset of the COVID-19 pandemic in the Republic of Serbia. The research was conducted on a sample of 73 publicly traded companies, of which 22 belong to the group of big companies, and 51 to the group of medium-sized companies over the 2018-2022 period. The results have shown that there is a statistically significant negative correlation between the determinants of profitability, liquidity and solvency and the probability of financial distress. In addition, it was shown that there is a statistically significant positive correlation between leverage and the probability of financial distress, as well as between company growth and the Altman Z-score indicator. It is concluded that there is a statistically significant difference in the value of the Altman Z-score indicator before and after the onset of the pandemic caused by the COVID-19 virus.