Duty calls: prediction of failure in reorganization processes
Fecha
2023Versión
Acceso abierto / Sarbide irekia
Tipo
Artículo / Artikulua
Versión
Versión aceptada / Onetsi den bertsioa
Identificador del proyecto
Impacto
|
10.1108/JRF-08-2022-0227
Resumen
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 ...
[++]
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. [--]
Materias
Failure,
Insolvency,
Prediction,
Reorganization processes
Editor
Emerald
Publicado en
Journal of Risk Finance, 24(3), 337-353
Departamento
Universidad Pública de Navarra/Nafarroako Unibertsitate Publikoa. Institute for Advanced Research in Business and Economics - INARBE
Versión del editor
Entidades Financiadoras
The authors gratefully acknowledge financial support from grant
funded by MCIN/AEI/10.13039/501100011033.