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Cross-Country Evaluation of Financial Reporting and Governance Practices through Fuzzy C-Means and TOPSIS Algorithms

Author

Listed:
  • Unal ERYILMAZ

    (Public Oversight Authority, Ankara, Türkiye.)

  • Deniz KOCAK

    (Corresponding author. Department of Econometrics, University of Osmaniye Korkut Ata, Osmaniye, Türkiye. Public Oversight Authority, Ankara, Türkiye.)

  • Abdulkerim CALISKAN

    (Department of Public Finance, University of Ankara Hacı Bayram Veli, Ankara, Türkiye.)

Abstract

In an era of ever-evolving global economic dynamics and governance frameworks, this study aims to cluster OECD countries based on their similarities in terms of their compliance with International Financial Reporting Standards (IFRS) and evaluates the performance of the countries in these clusters regarding their adoption of IFRS. For this purpose, 11 indicators as countries adopted IFRS, which essentially measure the quality of governance, were used in Fuzzy C-Means (FCM) and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) algorithms. The FCM algorithm captures the dynamic interrelations among the indicators, allowing for comprehensive modeling of complex systems. The TOPSIS algorithm further facilitates a sophisticated analysis by ranking countries, providing a clear and insightful classification that reflects their proximity to an idealized spectrum of financial and governance excellence. The findings reveal significant insights into the drivers of financial performance and governance quality.

Suggested Citation

  • Unal ERYILMAZ & Deniz KOCAK & Abdulkerim CALISKAN, 2024. "Cross-Country Evaluation of Financial Reporting and Governance Practices through Fuzzy C-Means and TOPSIS Algorithms," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 67-85, July.
    • Handle: RePEc:rjr:romjef:v::y:2024:i:2:p:67-85
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    More about this item

    Keywords

    Financial performance; Governance; IFRS; FCM; TOPSIS;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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