IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v47y2022ipas1544612321005055.html
   My bibliography  Save this article

Financial performance index of IPO firms using VIKOR-CRITIC techniques

Author

Listed:
  • Kumaran, Sunitha

Abstract

Investments in IPO markets are becoming increasingly complex because of the uncertain information and contradictory criteria that needs to be considered during the decision-making process. The main aim of this paper is to apply the Multi-Criteria Decision-Making Technique (MCDM) in order to improve the quality of the financial decision-making process and the quality of the resulting choices. This paper empirically evaluates the performance of IPO firms listed on the Saudi Stock Market using the accounting and value-based financial measures in ‘pre- and post-IPO period’, ranking them using the combined approach of objective weighting method (CRITIC) and the multi-criteria decision-making technique (VIKOR). The ranking list generated through the VIKOR_CRITIC approach will enable investors to identify the best ranked IPO firms and also allow them to make inter-firm comparisons based on the important representative measures drawn from a complex set of financial performance criterion. The combined VIKOR_CRITIC approach used in this study yielded favorable results and it ranked Saudi Airlines Catering Co., Saudi Co. for Hardware and Saudi Ground Services as the best performing IPO firms.

Suggested Citation

  • Kumaran, Sunitha, 2022. "Financial performance index of IPO firms using VIKOR-CRITIC techniques," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005055
    DOI: 10.1016/j.frl.2021.102542
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612321005055
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2021.102542?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Malcolm Baker & Jeffrey Wurgler, 2000. "The Equity Share in New Issues and Aggregate Stock Returns," Journal of Finance, American Finance Association, vol. 55(5), pages 2219-2257, October.
    2. Berna Bulgurcu, 2013. "Financial Performance Ranking of the Automotive Industry Firms in Turkey: Evidence from an Entropy-Weighted Technique," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 844-851.
    3. Jain, Bharat A & Kini, Omesh, 1994. "The Post-Issue Operating Performance of IPO Firms," Journal of Finance, American Finance Association, vol. 49(5), pages 1699-1726, December.
    4. Reena Aggarwal & Ricardo Leal & Leonardo Hernandez, 1993. "The Aftermarket Performance of Initial Public Offerings in Latin America," Financial Management, Financial Management Association, vol. 22(1), Spring.
    5. Maher Kooli & Jean-Marc Suret, 2001. "The Underpricing of Initial Public Offerings: Further Canadian Evidence," CIRANO Working Papers 2001s-50, CIRANO.
    6. Susanne Espenlaub & Alan Gregory & Ian Tonks, 2000. "Re‐assessing the long‐term underperformance of UK Initial Public Offerings," European Financial Management, European Financial Management Association, vol. 6(3), pages 319-342, September.
    7. Lee, Philip J. & Taylor, Stephen L. & Walter, Terry S., 1996. "Expected and realised returns for Singaporean IPOs: Initial and long-run analysis," Pacific-Basin Finance Journal, Elsevier, vol. 4(2-3), pages 153-180, July.
    8. Spronk, J. & Hallerbach, W.G.P.M., 2002. "The Relevance of MCDM for Financial Decisions," ERIM Report Series Research in Management ERS-2002-69-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    9. Roosenboom, Peter & van der Goot, Tjalling & Mertens, Gerard, 2003. "Earnings management and initial public offerings: Evidence from the Netherlands," The International Journal of Accounting, Elsevier, vol. 38(3), pages 243-266.
    10. Loughran, Tim & Ritter, Jay R, 1995. "The New Issues Puzzle," Journal of Finance, American Finance Association, vol. 50(1), pages 23-51, March.
    11. Chen, Gongmeng & Firth, Michael & Kim, Jeong-Bon, 2000. "The Post-issue Market Performance of Initial Public Offerings in China's New Stock Markets," Review of Quantitative Finance and Accounting, Springer, vol. 14(4), pages 319-339, June.
    12. Halim Kazan & Omer Ozdemir, 2014. "Financial Performance Assessment of Large Scale Conglomerates Via Topsis and Critic Methods," International Journal of Management and Sustainability, Conscientia Beam, vol. 3(4), pages 203-224.
    13. Halim Kazan & Ömer Özdemir, 2014. "Financial Performance Assessment of Large Scale Conglomerates Via Topsis and Critic Methods," International Journal of Management and Sustainability, Conscientia Beam, vol. 3(4), pages 203-224.
    14. Rashidah Abdul Rahman & Wan Razazila Wan Abdullah, 2005. "The New Issue Puzzle in Malaysia: Performance and Earnings Management," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 3(1), pages 91-110, January.
    15. Ritter, Jay R, 1991. "The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
    16. Wang, Changyun, 2005. "Ownership and operating performance of Chinese IPOs," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1835-1856, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Serkan Karakas & Mehmet Kirmizi & Huseyin Gencer & Kevin Cullinane, 2024. "A resilience assessment model for dry bulk shipping supply chains: the case of the Ukraine grain corridor," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 26(3), pages 391-413, September.
    2. Kara, Karahan & Yalçın, Galip Cihan & Çetinkaya, Aslı & Simic, Vladimir & Pamucar, Dragan, 2024. "A single-valued neutrosophic CIMAS-CRITIC-RBNAR decision support model for the financial performance analysis: A study of technology companies," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meisam Omidian & Habibollah Nakhaei & Karim Nakhaei, 2016. "Accounting accruals, earnings management and future performance of IPOs," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 5(1), pages 25-37.
    2. Shikha Bhatia & Balwinder Singh, 2012. "Examining the Performance of IPOs," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 37(3), pages 219-251, August.
    3. Farinos, Jose E. & Garcia, C. Jose & Ibanez, Ana Ma, 2007. "Operating and stock market performance of state-owned enterprise privatizations: The Spanish experience," International Review of Financial Analysis, Elsevier, vol. 16(4), pages 367-389.
    4. Zhang Hanbing & Jeffrey E. Jarrett & Xia Pan, 2021. "The Post-IPO Performance in the PRC," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(11), pages 109-109, July.
    5. Subadar Agathee, Ushad & Brooks, Chris & Sannassee, Raja Vinesh, 2012. "Hot and cold IPO markets: The case of the Stock Exchange of Mauritius," Journal of Multinational Financial Management, Elsevier, vol. 22(4), pages 168-192.
    6. Liu, Jianlei & Uchida, Konari & Gao, Ruidong, 2012. "Political connections and the long-term stock performance of Chinese IPOs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 814-833.
    7. Lee, Chien-Chiang & Ning, Shaolin & Hsieh, Meng-Fen & Lee, Chi-Chuan, 2020. "The going-public decision and rent-seeking activities: Evidence from Chinese private companies," Economic Systems, Elsevier, vol. 44(1).
    8. Wang, Xiaoming & Cao, Jerry & Liu, Qigui & Tang, Jinghua & Tian, Gary Gang, 2015. "Disproportionate ownership structure and IPO long-run performance of non-SOEs in China," China Economic Review, Elsevier, vol. 32(C), pages 27-42.
    9. Josef Schuster, 2003. "The Cross-Section of European IPO Returns," FMG Discussion Papers dp460, Financial Markets Group.
    10. Paul B. McGuinness, 2016. "Post-IPO performance and its association with subscription cascades and issuers’ strategic-political importance," Review of Quantitative Finance and Accounting, Springer, vol. 46(2), pages 291-333, February.
    11. Jog, Vijay & Otchere, Isaac & Sun, Chengye, 2019. "Does the two-stage IPO process reduce underpricing and long run underperformance? Evidence from Chinese firms listed in the U.S," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 59(C), pages 90-105.
    12. Alanazi, Ahmed S. & Al-Zoubi, Haitham A., 2015. "Extreme IPO underpricing and the legal environment in wealthy emerging economies," Journal of Multinational Financial Management, Elsevier, vol. 31(C), pages 83-103.
    13. Dario Salerno, 2021. "The Impact of Initial Public Offerings on Firms’ Performance: Disentangling Treatment from Self-Selection Effects," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 11(4), pages 1-1.
    14. João Batista Amorim Toniato, 2007. "“Hot Issue” IPO Markets and its Consequences for Issuing Firms and Investors: The UK Market of 2000," Brazilian Business Review, Fucape Business School, vol. 4(1), pages 1-26, January.
    15. Kim, Kenneth A. & Kitsabunnarat, Pattanaporn & Nofsinger, John R., 2004. "Ownership and operating performance in an emerging market: evidence from Thai IPO firms," Journal of Corporate Finance, Elsevier, vol. 10(3), pages 355-381, June.
    16. José Emilio Farinós, 2001. "Rendimientos anormales de las OPV en España," Investigaciones Economicas, Fundación SEPI, vol. 25(2), pages 417-437, May.
    17. Jean Jinghan Chen & Peng Cheng & Xinrong Xiao, 2011. "Related party transactions as a source of earnings management," Applied Financial Economics, Taylor & Francis Journals, vol. 21(3), pages 165-181.
    18. Huang, Guihai & Song, Frank M., 2005. "The financial and operating performance of China's newly listed H-firms," Pacific-Basin Finance Journal, Elsevier, vol. 13(1), pages 53-80, January.
    19. Maher Kooli & Jean-François L'Her & Jean-Marc Suret, 2003. "Do IPOs Underperform in the Long-Run? New Evidence from the Canadian Stock Market," CIRANO Working Papers 2003s-16, CIRANO.
    20. Radha Shiwakoti & Robert Hudson & Helen Short, 2005. "A study of the initial returns and the aftermarket performance of initial public offerings of demutualized building societies in the UK," Applied Economics Letters, Taylor & Francis Journals, vol. 12(7), pages 403-409.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005055. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.