Detekcija finansijskog distresa i manipulacije zaradama na tržištu kapitala Republike Srpske – sinergija Altmanovog i Beneishovog modela
Detection of financial distress and earnings manipulation in the Republic of Srpska capital market – the synergy of Altman and Beneish models

Summary/Abstract: The subject of this paper is the investigation of the correlation between financial stability, measured by the Altman Z-score model, and the probability of earnings manipulation, measured by the Beneish M-score model. The primary objective of the research is to determine whether financial distress serves as a principal motive for window-dressing financial statements among non-financial joint-stock companies on the Banja Luka Stock Exchange. Financial distress is defined as a business phase in which a company faces difficulties meeting its due obligations because of insufficient cash flows to cover fixed costs and loan installments.The research was conducted on a sample of 41 joint-stock companies listed on the Banja Luka Stock Exchange. Audited annual financial statements for the period 2021–2024 were analyzed. The direction and strength of the relationship between the observed variables were examined using simple linear regression. Additional insight was provided through the analysis of audit opinions within the context of the going concern principle.Regression analysis results (y = -0.1887x) confirm the existence of a weak negative correlation. This indicates that a decline in financial stability increases the risk of financial statement manipulation. Although the coefficient of determination ($R^2 = 0.0908$) suggests that distress explains only a small fraction of the variations in the M-score, clear cases were identified where poor ratings coincide with aggressive accounting policies. The paper concludes that these models are complementary tools, providing significant support to auditors, investors, and decision-makers in identifying high-risk zones in transitional capital markets.

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