Endogenous factors of financial fragility in colombian firms. An application of discriminant analysis.
DOI:
https://doi.org/10.17561/ree.n1.2023.7241Keywords:
Corporate finance, working capital, financial fragility, Minsky model, liquidity, profitability, financial structureAbstract
Research on corporate finance has traditionally focused on the study of short and long-term financial decisions, in particular, those that concern changes in the capital structure, sources of financing, and value maximization strategies, among others. Ergo, financial management processes are a fundamental part of corporate strategy. The ultimate objective of this paper is to analyze the financial performance of 150 companies in the Colombian manufacturing and metalworking sector in the 2019-2020 period. For this purpose, a Fisher discriminant analysis model is estimated in order to find a linear combination of economic, financial and operational variables and classify the strategic business units. This set of parameters provides information on the sources and triggers of instability, caused by internal dynamics of the sector where the companies are located. The results indicate that financial fragility arises as a consequence of lack of coordination in the working capital management policy. Those speculative and Ponzi schemes exhibit worse productivity, indebtedness and liquidity indicators, compared to hedge schemes.
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