Open Access
Duty calls: prediction of failure in reorganization processes
(Emerald, 2023) Abinzano Guillén, María Isabel; Bonilla Acosta, Harold; Muga Caperos, Luis Fernando; Institute for Advanced Research in Business and Economics - INARBE
Purpose – Using data from business reorganization processes under Act 1116 of 2006 in Colombia during the period 2008 to 2018, a model for predicting the success of these processes is proposed. The paper aims to validate the model in two different periods. The first one, in 2019, characterized by stability, and the second one, in 2020, characterized by the uncertainty generated by the COVID-19 pandemic. Design/methodology/approach – A set of five financial variables comprising indebtedness, profitability and solvency proxies, firm age, macroeconomic conditions, and industry and regional dummies are used as independent variables in a logit model to predict the failure of reorganization processes. In addition, an out-ofsample analysis is carried out for the 2019 and 2020 periods. Findings – The results show a high predictive power of the estimated model. Even the results of the out-ofsample analysis are satisfactory during the unstable pandemic period. However, industry and regional effects add no predictive power for 2020, probably due to subsidies for economic activity and the relaxation of insolvency legislation in Colombia during that year. Originality/value – In a context of global reform in insolvency laws, the consistent predictive ability shown by the model, even during periods of uncertainty, can guide regulatory changes to ensure the survival of companies entering into reorganization processes, and reduce the observed high failure rate.
Open Access
Prediction of failure in reorganization agreements under Colombia's Corporate Insolvency Act
(Emerald, 2023) Abinzano Guillén, María Isabel; Bonilla Acosta, Harold; Muga Caperos, Luis Fernando; Institute for Advanced Research in Business and Economics - INARBE
Purpose – The aim of this paper is to provide an overview of the impact of the implementation of Colombian Corporate Insolvency Act 1116 of 2006 in the period 2008–2018 and to assess the relevance of a broad set of financial predictors, as well as variables related to the economic context or the characteristics of the process itself, in explaining the failure of reorganization processes. Design/methodology/approach – Both logit and probit models are estimated, starting from a large number of variables proposed in the literature which are then narrowed down to a final selection based on their individual significance and machine learning. Findings – The results show the prevalence of a limited number of financial variables related to equity, indebtedness, profits and liquidity as predictors of the failure of reorganization processes. The use of financial information from the year prior to the completion of the reorganization improves predictive accuracy and reliability. The debt-to-equity indicator provides no significant explanatory power, while voluntary entry into a reorganization process favors its success. Originality/value – While financial and accounting information is used across the literature to predict insolvency events, it is used here to predict success or failure in reorganization processes under the conditions imposed by a specific legislative act in a Latin American context.
Open Access
A study of the determinants of insolvency processes outcomes: the case of corporate reorganization in Colombia
(2023) Bonilla Acosta, Harold; Abinzano Guillén, María Isabel; Muga Caperos, Luis Fernando; Gestión de Empresas; Enpresen Kudeaketa
Corporate reorganization, being one of the most accessed bankruptcy procedures and with greater potential consequences for the stability and growth of the productive fabric, is placed in the focus of study of this thesis to be unraveled from the scope of the prediction of results in the context of the current Corporate Insolvency Regime in Colombia (Act 1116 of 2006). This interest is reinforced by the research gap detected in the literature on its determinants, especially when the analysis is extended to countries and legal frameworks other than the United States, Great Britain and the European Union. Indeed, only a handful of studies have analyzed the prediction of reorganization outcomes by focusing on the exploration of financial, economic and, to a lesser extent, firm characteristics, and the procedure itself (Camacho-Miñano et al., 2013; Antill and Grenadier, 2019; Cepec and Grajzl, 2021a), but in no case has the lens been set on Latin America. The thesis is illustrated in three chapters and each of these is developed aiming at a specific research objective according to the gap detected in the literature. The first chapter deals with the predictors of the failure of reorganization processes in Colombia and provides an overview of the implementation of Act 1116 of 2006 with respect to this insolvency procedure. The second chapter of the thesis proceeds with the prediction of insolvency outcomes by proposing a model for forecasting the success/failure of reorganization. The model is validated in two different periods. The first, in 2019, was characterized by stability, and the second, in 2020, was characterized by uncertainty generated by the COVID-19 pandemic. The findings and contributions of the first two chapters of the thesis laid the foundations for new research focused on aspects barely explored in the insolvency literature. The development of Chapter 3 responds to the necessity to understand the role of the insolvency practitioner in the outcome of corporate reorganization and thus lay the foundations for a discussion that, in the Latin American context and specifically in Colombia, is practically nonexistent considering the theoretical and methodological approach of the research. The chapter's contribution to the literature highlights a priori the characterization of the figure of the insolvency practitioner, exploiting the legal framework of a Latin American country that presents sociocultural differences compared to most other OECD members, but at the same time shows similarities between its insolvency regime and the bankruptcy codes of some of the group's economic powers. This thesis lays the foundations of a conceptual framework around predictors, predictive models, and the role of the insolvency practitioner in the outcomes of corporate reorganization from a pioneering context of analysis in the face of previous evidence in the literature.
Open Access
Financial advisory in classroom: educational innovation based on Project-Based Learning (PBL)
(Universidad Politecnica de Valencia, 2024-06-01) Abinzano Guillén, María Isabel; Bonilla Acosta, Harold; Corredor Casado, María Pilar; Río Solano, María Cristina del; Ferrer Zubiate, Elena; González Urteaga, Ana; Mansilla Fernández, José Manuel; Martínez García, Beatriz; Muga Caperos, Luis Fernando; Gestión de Empresas; Enpresen Kudeaketa
This paper aims to describe an educational innovation in teaching-learning based on Project-Based Learning (PBL) carried out in the subjects of "Basic Finance" taught in the Double Bachelor's Degree in Management, Business Administration, and Law of the Public University of Navarre (UPNA). These are Financial Markets and Instruments, Corporate Finance I, and Corporate Finance II. Specifically, in each of the subjects, the project consisted of preparing an advisory report. Thus, the classroom becomes a financial consultancy covering its different areas of work. Furthermore, this study evaluates the educational innovation, analysing both quantitative and qualitative aspects across subjects and gender. In summary, there is a significant improvement in grades after the introduction of PBL. Students also support the implementation of PBL, with gender differences found. Our findings motivate the continued use of dynamic teaching methods and underline the importance of adapting approaches to improve educational outcomes.
Open Access
Analysis of the feasibility of investment projects in real assets with PBL: a very real experience
(Universitat Politècnica de València, 2023) Abinzano Guillén, María Isabel; Bonilla Acosta, Harold; Corredor Casado, María Pilar; Río Solano, María Cristina del; Ferrer Zubiate, Elena; González Urteaga, Ana; Mansilla Fernández, José Manuel; Martínez García, Beatriz; Muga Caperos, Luis Fernando; Gestión de Empresas; Enpresen Kudeaketa
This paper studies the application of the PBL methodology in the Corporate Finance I course. The project to be carried out consists of the realization of a report on the feasibility of an investment project for a company that wants to take advantage of a subvention to finance the renovation of the bus fleet towards a more sustainable one. In addition to describing the implementation, this paper analyzes the impact that the introduction of the PBL methodology has in terms of class attendance and participation in the activity and also in the rest of the course. A clear decrease in absenteeism in class and in exams is observed. Moreover, the impact on grades is analyzed, with a significant increase in marks for all the degrees under study. Finally, we interpret the surveys that were passed to the students, showing that the students recognize the value of applying PBL in the subject.
Open Access
Suspense and surprise: the role of bookmakers' spreads
(SAGE, 2024-10-16) Abinzano Guillén, María Isabel; Bonilla Acosta, Harold; Muga Caperos, Luis Fernando; Gestión de Empresas; Enpresen Kudeaketa; Institute for Advanced Research in Business and Economics - INARBE
Uncertainty in a competition's final result can affect the event's demand via suspenseand surprise. Based on a sample of more than 50,000 professional tennis matches, thispaper shows how information from bookmaker prices, implied probabilities, and pricespreads contain relevant information that explains the uncertainty in the final results of the matches. There is a negative relation between the implied probability for the favorite and the different measures of match result uncertainty proposed and a positive rela-tionship between the spread and these measures when the bookmaker sets prices based on information. This second relation disappears when the bookmaker setsprices based on betting volumes. The results have potential implications both for organizers in scheduling matches with higher levels of uncertainty and for punters in settingstrategies that predict the exact result of a match.