An objectıve criteria proposal for the comparison of MCDM and weighting methods in financial performance measurement: An application in Borsa Istanbul

Abstract

Financial performance research with multi-criteria decision making (MCDM) methods, is a common subject of study not only for researchers in the finance literature but also in the applied sciences. Financial performance manifests itself in an internal universe that a firm can directly control, while the share return of the same firm is shaped synchronically in an external universe that cannot be controlled directly. On the other hand, preferring the most suitable MCDM and weighting method to use in measuring financial performance is often regarded as a source of uncertainty. In this study, the share price is used as an external proxy and a tool for comparing MCDM methods, completely different from the previously proposed approaches based on the superiority of internal features. This study was conducted on 131 manufacturing companies in Borsa Istanbul, covering entire 20-quarter period between 2014 and 2018. The experimental findings of the study provide valid solutions for the MCDM and weighting selection problem, that can be proposed as a practical and indirect solution. The results show that preference ranking organization method for enrichment of evaluations (PROMETHEE) method used with hybrid weighting technique produced by far the best performance rankings in 19 out of 20 quarterly periods when compared to the technique for order preference by similarity to ideal solution (TOPSIS) and weighted sum approach (WSA).

A NEW MULTI-CRITERIA DECISION MAKING METHOD: BULUT INDEX-BETA (BI-β)

“…ÇKKV yöntemlerinden elde edilen sıralamaların istatistiksel olarak birbirlerinden farklı olup olmadığını ortaya koymak için parametrik olmayan Spearman sıra ve Kendall Tau korelasyonları kullanıldığı görülmektedir (Sedgwick, 2014;Ceballos ve diğerleri, 2016;Ishizaka ve Siraj, 2018;Baydaş ve Elma, 2021;Shekhovtsov, 2021;Paradowski ve diğerleri, 2021). Bu çalışmada da BE ve BE-β yöntemlerinin sıralamalarının istatistiksel olarak birbirinden farklı olup olmadığını ortaya koymak için Spearman sıra ve Kendall Tau korelasyonları kullanılmıştır.…”

“…İki sıralamanın sırasının doğruluğunun istatistiksel olarak karşılaştırılmasında en yaygın kullanılan yaklaşımlardan ikisi, Spearman sıra ve Kendall Tau korelasyonlarıdır (Sałabun ve Urbaniak, 2020). Spearman sıra korelasyon katsayısı, bir değişkenin diğer değişken tarafından açıklanan sıra varyansının yüzdesi olarak ifade edilmektedir (Spearman, 1987;Baydaş ve Elma, 2021). Kendall'ın Tau korelasyon katsayısı ise iki sıralama grubu arasındaki uyum derecesini göstermektedir (Long ve Cliff, 1997).…”

“…Finansal karar vermede çok kriterli karar verme yöntemlerinin kullanıldığı diğer çalışmalar da mevcuttur (Feng ve Wang, 2000;Doumpos ve diğerleri, 2002;Spathis ve diğerleri, 2002;Wang, 2009;Wu ve diğerleri, 2009;Bülbül ve Köse, 2011;Uygurtürk ve Korkmaz, 2012;Lee ve Lin, 2013;Ferreira ve diğerleri, 2014;Pätäri ve diğerleri, 2018;Güney ve diğerleri, 2020;Locurcio ve diğerleri, 2021;Baydaş ve Elma, 2021).…”

Objective Criticism and Negative Conclusions on Using the Fuzzy SWARA Method in Multi-Criteria Decision Making

“…If we add to this the increasing presence of uncertainty and the need for more precise decision making, then decision makers are faced with an extremely difficult task. The field of MCDM is one of the most developed areas of operational research which, due to a large number of methods, finds its application every day in various fields: supply chain management [1,2] construction [3,4], marketing [5,6], logistics [7,8], financial management applications [9,10], and many others [11][12][13]. In conditions when there is a constant search for better, faster, and more efficient solutions, it is unacceptable to apply approaches that make wrong decisions because, in that way, a chain of negative values is created.…”

A novel iterative approach to determining compromise rankings

“…Ghaleb et al evaluated the TOPSIS, AHP, and VIKOR methods based on five selected factors [3]. Baydas et al used the stock price from the finance domain problem as a tool to compare the MCDM methods [4].…”