The impact of COVID-19 pandemic on financial failure risk in technology businesses: A study on Borsa Istanbul

The aim of this study is to examine the impact of the COVID-19 pandemic, which started in 2019, on the financial failure risks of companies operating in the technology sector whose stocks are traded on Borsa İstanbul. In the study, the widely used Altman Z-Score and Springate S-Score models were employed to assess financial failure. Within this framework, the financial data of technology companies traded on Borsa İstanbul between 2017 and 2022 were analyzed. The study reveals differences between the pre-pandemic and pandemic periods through Wilcoxon signed-rank test and Spearman correlation analysis. The findings of the research indicate that the financial failure risk, as calculated by the Altman Z-Score, showed a significant difference between the pre-pandemic and pandemic periods. This result can be explained by the fact that the pandemic negatively affected the financial structures of companies, increasing their bankruptcy risks. The main challenges faced by companies during the pandemic included liquidity issues, revenue losses, and rising costs. In the analysis based on the Springate S-Score, another model for calculating financial failure risk, no significant impact of the pandemic on financial failure risk was observed. This is thought to be due to the sensitivity of the financial ratios used to different items in companies' financial statements, and the model's particular relationship with operational and profitability factors. The correlation analysis revealed a moderate positive relationship between the Altman Z-Score and Springate S-Score in the pre-pandemic period, with this relationship strengthening during the pandemic. This highlights the importance of using both indicators together in evaluating the financial situation of companies.