Author: Jr, Joseph Calandro

Source: Strategy and Leadership, Volume 35, Number 5, 2007 , pp. 37-43(7)

Publisher: Emerald Group Publishing Limited

Abstract:

<B>Purpose</B> - <IT>The purpose of this article is to provide commentary on the utility of Altman's <IT>Z</IT>-score as a strategic assessment and performance management tool. This possibility is suggested in the recently published book <IT>Measuring Organizational Performance - Metrics for Entrepreneurship and Strategic Management Research</IT> (Northampton, MA: Edward Elgar, 2006) by Robert B. Carton and Charles W. Hofer.</IT> <B>Design/methodology/approach</B> - <IT>This paper is a corporate manager's analysis of the utility of Altman's <IT>Z</IT>-score as a strategic assessment and performance management tool based on published research, with suggestions for further research.</IT> <B>Findings</B> - <IT>The analysis supports Carton and Hofer's findings with respect to the utility of the <IT>Z</IT>-score as a strategic assessment and performance management tool.</IT> <B>Practical implications</B> - <IT>While the Z-score is both popular and widely used in the fields of credit risk analysis, distressed investing, M&A target analysis, and turnaround management it has received relatively little attention as a strategic assessment and performance management tool. The findings of Carton and Hofer's study, in conjunction with the impressive results achieved by GTI Corporation, suggest that applying the <IT>Z</IT>-score in strategy and performance management may also be warranted, especially after more research is undertaken.</IT> <B>Originality/value</B> - <IT>This article offers a manager's perspective on new research that indicates the potential of a popular financial distress metric to provide insight in the areas of entrepreneurship and strategic management.</IT>

Keywords: Assessment; Change management; Corporate strategy; Performance management

Document Type: Research article

DOI: http://dx.doi.org/10.1108/10878570710819206

Publication date: 2007-09-11

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• Previously published as The Antidote

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