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A novel application of grey principal component analysis to determine stockholder’s approach towards financial ratios

Author

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  • Amin Babaei Falah
  • Morteza Sardari

Abstract

In this paper, we try to determine the stockholder’s desire approach to financial ratios using a combination of principal component analysis and grey theory.Grey Principal Component Analysis (GPCA)handles poor information reduces dimensions of variables and gives an appropriate score to each company. Here we employ GPCA to identify more appropriate strategies of normalizing data curves to reduce the discrepancy between the GPCA-ranking and return-ranking, hence determining the approaches of stockholders of listed pharmaceutical firms of Tehran Stock Exchange (TSE) regarding financial ratios.

Suggested Citation

  • Amin Babaei Falah & Morteza Sardari, 2015. "A novel application of grey principal component analysis to determine stockholder’s approach towards financial ratios," Business and Economic Horizons (BEH), Prague Development Center, vol. 11(1), pages 41-50, April.
    • Handle: RePEc:pdc:jrnbeh:v:11:y:2015:i:1:p:41-50
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    Citations

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    Cited by:

    1. Bruno Ricca & Massimiliano Ferrara & Salvatore Loprevite, 2023. "Searching for an effective accounting-based score of firm performance: a comparative study between different synthesis techniques," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(4), pages 3575-3602, August.

    More about this item

    Keywords

    Performance evaluation; grey principal component analysis; MCDM; pharmaceutical industry; market desire;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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