Dirasat, Administrative Sciences, Volume 38, No. 1, 2011 - 321 - An Evaluation of Corporate Strategic Health Using Altman’s Model: A Sample from Jordanian Shareholding Industrial Companies Ahmed A. Al-Qatamin* ABSTRACT This study aimed at evaluating strategic health of a sample of Jordanian Industrial shareholding companies. To achieve this objective, Altman Z-Factor formula model was used to calculate the Z-Score values which indicate the level of strategic health of the companies included in the sample. Results indicated that only 10 percent of the sampled companies have enjoyed strong strategic health. Results indicted also that, 40 percent of the sample has been classified into normal strategic health category, and 50 percent of the sample was correctly classified in the category of alarming strategic health category. Keywords: Altman’s Z-Value, Strategic Performance, Strategic Management, Strategic Health. INTRODUCTION The purpose of this article is to provide an assessment of corporate strategic health of Jordanian publicly held industrial companies utilizing Altman Z-Factor formula. Corporate strategic health is defined as a set of strategic factors that contribute significantly to a firm's creative performance capability. It allows the corporation to create and maintain favorable future conditions that guarantee continuity and survival. This means that a healthy-performing corporation that enjoys high levels of strategic performance is characterized of being able to create and maintain a set of strategic performance capabilities that distinguish it from unhealthy corporation, (Chennerley and Neel, 2002). Recently, the subject of corporate strategic health has been at the center of interests of both academic and professional corporate circles, (Hui et al., 2009). The goal of this emphasis was to improve strategic health management of corporations so that future options can be managed adequately. Many research articles were published during the last decade with a focus on the development of proper measurements of strategic performance (Vital et al., 2002; Kaplan and Norton, 2001). The main theme, of these articles, was that strategic health is a difficult and complicated phenomenon for measurement and conventional accounting-based measurements cannot successfully capture the magnitude of the phenomena. Therefore, multi-dimensional and multi-factor measurements just as Altman’s formula should be utilized, (Bourne et al., 2000). Traditional measures for the evaluation of corporate strategic health are unable to depict the nature and orientation of this phenomenon simply because they measure past performance while strategic health requires a forward-looking measure, (Sim and Koh, 2001). Alternative approaches were developed in order to assess the firm strategic posture which involves a firm's ability to create and successfully maintain certain capabilities that help moving it forward, (Chenhall, 2005). This measurement system is going to be represented by Altman’s Z-Factor and will be used to evaluate strategic health in the sample for this study. The Z-Factor is a very popular, empirically tested indicator of strategic health or strategic physical-fitness of an organization. Originally Altman’s model is a multiple discriminate analysis based method of testing for potential corporate failure (Altman, 1986). Altman utilized data from a sample of weak, unhealthy and low- performing American industrial corporations and another sample of healthy high-performing corporations to reach at a formula called Z-Factor. His investigations aimed at the determination of whether failed corporations had significantly different performance levels than did * NYIT, Jordan. Received on 18/8/2009 and Accepted for Publication on 11/5/2010. © 2011 DAR Publishers/University of Jordan. All Rights Reserved.