Bankruptcy Analysis of Polish Waste Management Companies

Proposal of a Discriminatory Model

Abstract

The waste management system should be constantly monitored to ensure rational waste management, limit the possibility of contamination of surface and groundwater, reduce the risk of waste fires and illegal storage. Unfortunately, in many cases this system remains without constant supervision, and subsequent waste management enterprises remain bankrupt, are closed or are subject to bankruptcy proceedings. Main aim of this paper is the construction of the author's model of financial bankruptcy prediction dedicated to the specificity of waste management companies activity. That discriminatory model will allow entities dealing with waste management to be given early warning of the risk of bankruptcy and for them to take corrective actions that will allow them to continue their very important activities aimed at protecting the natural environment. Based on the backward stepwise regression procedure on a group of 136 bankrupt and 136 still operating enterprises from the analyzed sector of economy, a discriminatory model was proposed. It was able to accurately predict the bankruptcy/continuation of business activity of over 76% of the analyzed waste management enterprises. The effectiveness of the predictions of the original model is much higher than the predictions calculated using other, popular discriminatory models. Obtained research results indicate that the proposed models should be constantly developed for waste management companies, not only for economic reasons, but above all for environmental reasons.