Capturing the Effect of the COVID-19 Pandemic Outbreak on the Financial Performance Disparities in the Energy Sector: A Hybrid MCDM-Based Evaluation Approach

Abstract

The COVID-19 pandemic has impacted the financial performance of companies in different sectors. One of the most important sectors affected is the energy sector. Therefore, this research study aims to conduct a financial performance evaluation of companies in the Saudi energy sector in 2019, 2020, and 2021. This is to capture and analyze the effect on companies before, during, and post the COVID-19 pandemic, respectively. A hybrid multicriteria decision-making (MCDM) approach is followed to achieve the objective. The financial performance evaluation of energy companies is based on four financial dimensions and 11 performance indicators. Results revealed that energy companies’ efficiency and profitability were relatively the most important dimensions, followed by leverage and liquidity. Furthermore, results revealed the relative importance of the indicators from the most to the least important. Results also revealed the effect of COVID-19 on energy companies’ financial performance, demonstrating the change over the three years. Implications include providing insights for energy companies on the financial dimensions and indicators to be maintained and monitored in the case of pandemics. Furthermore, to assist decision-makers in the energy sector in developing strategies to mitigate financial performance disparities during and post-pandemics.

An Integrated Fuzzy MCDM and Trend Analysis Approach for Financial Performance Evaluation of Energy Companies in Borsa Istanbul Sustainability Index

“…Table 1 shows a summary of the literature review integrated with TOPSIS and other methods. [12] Petrochemical FAHP-FTOPSIS 2022 [21] Banking CRITIC-DEMATEL-TOPSIS 2016 [13] Energy FAHP-FTOPSIS 2022 [22] Stock Market Entropy-DEMATEL-TOPSIS 2018 [14] Automotive TOPSIS 2023 [23] Stock Market Entropy-FTOPSIS 2019 [15] Tourism MAUT-TOPSIS-PROMETHEE 2023 [24] Energy AHP-TOPSIS 2020 [16] Food Service TOPSIS 2023 [25] Energy DEA-IRP-TOPSIS…”

A Hybrid MCDM Approach Using the BWM and the TOPSIS for a Financial Performance-Based Evaluation of Saudi Stocks

“…They identified criteria (risk, return, and liquidity) that influence investors' stock investment decisions and provided insight into investors' decision-making behaviors. Makki and Alqahtani [56] captured the effect of the COVID-19 pandemic on financial performance disparities in the energy sector using a hybrid MCDM-based evaluation approach. This study contributed to understanding the impact of the pandemic on the energy sector's financial performance disparities.…”

“…For example, Alamoudi and Bafail [41] discussed applying the BWM-RAPS approach to evaluate and rank banking sector companies on the Saudi Stock Market. Furthermore, Makki and Alqahtani [56] evaluated financial performance disparities in the Saudi energy sector before, during, and after COVID-19 using a hybrid MCDM approach, highlighting impacts and providing insights for decision-makers. These studies provided evidence of the suitability of the BWM and TOPSIS for evaluating and ranking stocks based on financial indicators.…”

Enhancing Financial Performance Evaluation: The MEREC-RBNAR Hybrid Method for Sustainability-Indexed Companies

“…Tavana et al [25] identified the performance of pharmaceutical companies using the DEMATEL-Fuzzy ANP (Analytic Network Process) method. Makki and Alqahtani [26] assessed the financial performance of companies operating in the energy sector using the AHP-TOPSIS method, considering financial ratios. Isik et al [27] calculated the financial performance of companies in the food and beverage industry using the DEMATEL-CRITIC (Criteria Importance Through Intercriteria Correlation), EDAS, WASPAS (Weighted Aggregated Sum Product Assessment), and TOPSIS methods.…”