The Importance of the discriminant Analysis for the Evolution of the equity Prices

Abstract

This paper aims to show the correlation between the results obtained using the discriminant analysis and the evolution of stock prices of listed Romanian companies. For this purpose, we have carried out research on a sample of 32 issuers from categories I and II of the Bucharest Stock Exchange, pertaining to nine economic sectors, for the period 2010-2012. Our study is based on the Anghel prediction model of bankruptcy, using the stock prices of the 32 listed companies from the first and the last day of trading for each year examined. The results obtained by applying the prediction model allow the classification of issuers into potential bankrupt and non-bankrupt firms and help investors take appropriate decisions on the stock market.