Judicial recovery and forecasting models; A study on the determining indicators of the recovery of Brazilian companies

Resumen

The aim of this study is to identify forecasting models that relate the main financial, value, an environmental, social, and governance (ESG) indicators to the periods during which Brazilian companies were in judicial reorganization or went bankrupt between 2010 and 2020. A database comprising 73 open capital companies was constructed, with 34 undergoing judicial recovery (JR) or bankruptcy during the analyzed period, and 39 selected for the control base. A total of 2,954 observations were obtained. Logistic regression, the most utilized methodology in surveyed studies, was employed to assess the significance of each variable group in the model. A total of 73 variables were calculated, including capital structure, profitability, liquidity, investment, value, and ESG indicators. Analysis revealed that, in cases of companies in JR, significant variables were bank debt, working capital, and spread. For companies that went bankrupt, the most significant variables were bank debt and working capital. This proposed model is anticipated to contribute notably to academia and the market by incorporating various variables and indicators not previously analyzed together. It aims to enhance the understanding of corporate insolvency. In conclusion, these findings may inform strategic decision-making and risk management practices within the corporate sector.