Abstract

ROQUE, Daniel Isaac  and  CAICEDO CARRERO, Andrés. Relation between the Creation of Economic Value and Financial Insolvency in Companies Unlisted at the Colombian Stock Market (2016-2019). Semest. Econ. [online]. 2021, vol.24, n.57, pp.76-97.  Epub Jan 13, 2022. ISSN 0120-6346.  https://doi.org/10.22395/seec.v24n57a4.

This article has the goal of assessing the correlation of the results presented by the financial tools Altman Z-Score and Economic Value Added (EVA). To achieve it, the study employs a quantitative methodological approach with a descriptive scope. The results corroborate the effectiveness of the individual application of the EVA and Z score model. Nonetheless, the statistical tests (correlation, dispersion graphics and linear regression) reveal a low relation between the creation of added economic value and the probability of financial insolvency. The findings make evident that, when applying both tools for the measurement of the financial performance, the results might contradict each other between the creation of value by the company, which implies a low probability of financial insolvency, and the probability of bankruptcy, i.e., a low Z score. The study can conclude that this low relation happens due to the base of financial information that is used by both tools. Differing from the EVA application, which needs the definition of exogenous variables that companies cannot control, the Z model centers its calculations on endogenous variables of the financial reports of the company.

Keywords : Financial management; economic added value; financial insolvency; Colombia.

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