INSOLVENCY AS A RISK FACTOR FOR BANKRUPTCY IN COLOMBIAN CONSTRUCTION COMPANIES DURING THE YEARS 2019 TO 2022

Abstract

This study examines the probability of bankruptcy and insolvency in Colombian construction companies between 2019 and 2022. The Z2 model has been shown to have an 82% accuracy rate in predicting the risk of insolvency, demonstrating its value as a preventive measure. According to the research, risk levels increased significantly from 2019, particularly in 2020 when a notable increase in companies with a high probability of going bankrupt was found as a result of the limitations of the pandemic. The results show a clear correlation between the levels of bankruptcy risk and financial attributes such as the structure of own funds. In addition, a strong association between the results of the model and the capital structure of the companies is confirmed. Beyond offering revealing information for the construction sector, this study creates prospects for future research in other economic sectors affected by similar circumstances.