IDEAS home Printed from https://ideas.repec.org/a/taf/jbemgt/v15y2014i3p509-529.html
   My bibliography  Save this article

A hybrid multiple criteria decision-making model for investment decision making

Author

Listed:
  • Li-Chang Hsu

Abstract

Investments are accompanied by risks. How investors choose the right investment tools to assist in the selection of investment targets is a topic worth exploring. Therefore, this study aimed to develop an investment decision-making process to deal with this issue. Firstly, we proposed a globalized modified grey relational analysis to select the representative indicators including the financial indicators and risk measurement indicators. Then we combined financial and risk evaluation indicators, and divided companies into low, moderate and high-risk groups through the grey clustering analysis. Finally, Vlse Kriterijumska Optimizacija Kompromisno Resenje (VIKOR) combined with the grey entropy weighting method was applied to business performance evaluation and sorting of each grouping. In order to verify this study, a combination of 21 financial ratios and four risk indicators was utilized in order to verify the evaluation and decision-making process in the operating performance of 62 listed opto-electronics companies in Taiwan. The results of ranking the operating performance for each group can be made available to company managers as a reference in order to enhance competitiveness and business performance. The results can also be used as the basis for decision-making to aid investors who are facing many investment portfolios.

Suggested Citation

  • Li-Chang Hsu, 2014. "A hybrid multiple criteria decision-making model for investment decision making," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(3), pages 509-529, June.
    • Handle: RePEc:taf:jbemgt:v:15:y:2014:i:3:p:509-529
    DOI: 10.3846/16111699.2012.722563
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.3846/16111699.2012.722563
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.3846/16111699.2012.722563?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. Bowman, Robert G, 1979. "The Theoretical Relationship between Systematic Risk and Financial (Accounting) Variables," Journal of Finance, American Finance Association, vol. 34(3), pages 617-630, June.
    2. Hallerbach, W.G.P.M. & Spronk, J., 2003. "A Multidimensional Framework for Financial-Economic Decisions," ERIM Report Series Research in Management ERS-2003-021-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.
    3. Opricovic, Serafim & Tzeng, Gwo-Hshiung, 2007. "Extended VIKOR method in comparison with outranking methods," European Journal of Operational Research, Elsevier, vol. 178(2), pages 514-529, April.
    4. Prokopczuk, Marcel & Rachev, Svetlozar T. & Schindlmayr, Gero & Truck, Stefan, 2007. "Quantifying risk in the electricity business: A RAROC-based approach," Energy Economics, Elsevier, vol. 29(5), pages 1033-1049, September.
    5. Hamada, Robert S, 1972. "The Effect of the Firm's Capital Structure on the Systematic Risk of Common Stocks," Journal of Finance, American Finance Association, vol. 27(2), pages 435-452, May.
    6. Feng, Cheng-Min & Wang, Rong-Tsu, 2000. "Performance evaluation for airlines including the consideration of financial ratios," Journal of Air Transport Management, Elsevier, vol. 6(3), pages 133-142.
    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. Alfonso Valero, 2024. "Diversification strategies for indirect real estate. Intersection of business, economics, and society in shanghai mixed-use developments," SN Business & Economics, Springer, vol. 4(10), pages 1-26, October.
    2. Chia-Chen Yang & Shang-Ling Ou & Li-Chang Hsu, 2019. "A Hybrid Multi-Criteria Decision-Making Model for Evaluating Companies’ Green Credit Rating," Sustainability, MDPI, vol. 11(6), pages 1-23, March.
    3. Elena Valentina Ţilică & Victor Dragotă & Camelia Delcea & Răzvan Ioan Tătaru, 2024. "Portfolio management under capital market frictions: a grey clustering approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-36, December.
    4. Vuković Marija & Pivac Snježana & Babić Zoran, 2020. "Comparative analysis of stock selection using a hybrid MCDM approach and modern portfolio theory," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 6(2), pages 58-68, December.
    5. Jamal Ouenniche & Kais Bouslah & Blanca Perez-Gladish & Bing Xu, 2021. "A new VIKOR-based in-sample-out-of-sample classifier with application in bankruptcy prediction," Annals of Operations Research, Springer, vol. 296(1), pages 495-512, January.

    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. Kusano, Masaki, 2018. "Effect of capitalizing operating leases on credit ratings: Evidence from Japan," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 30(C), pages 45-56.
    2. Hsieh, Su-Jane & Liu, Shuming, 2021. "The cost-of-equity implications of off-balance sheet pension liabilities," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(1).
    3. Namık Kemal Erdoğan & Serpil Altınırmak & Çağlar Karamaşa, 2016. "Comparison of multi criteria decision making (MCDM) methods with respect to performance of food firms listed in BIST," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 5(1), pages 67-90.
    4. Dean Hanlon, 2019. "Mandatory accounting change and debt covenant violation: Additional evidence from SFAS 150," Australian Journal of Management, Australian School of Business, vol. 44(3), pages 355-387, August.
    5. T.G. Saji, 2018. "Predicting Market Betas," Paradigm, , vol. 22(2), pages 160-174, December.
    6. Drobetz, Wolfgang & Menzel, Christina & Schröder, Henning, 2016. "Systematic risk behavior in cyclical industries: The case of shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 88(C), pages 129-145.
    7. Serhat KARAOGLAN & Serap SAHIN, 2018. "BIST XKMYA Isletmelerinin Finansal Performanslarinin Cok Kriterli Karar Verme Yontemleri Ile Olcumu ve Yontemlerin Karsilastirilmasi," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 18(1), pages 63-80.
    8. Luis García‐Feijóo & Randy D. Jorgensen, 2010. "Can Operating Leverage Be the Cause of the Value Premium?," Financial Management, Financial Management Association International, vol. 39(3), pages 1127-1154, September.
    9. A. Rashad Abdel†Khalik, 1990. "Specification problems with information content of earnings: revisions and rationality of expectations and self†selection bias," Contemporary Accounting Research, John Wiley & Sons, vol. 7(1), pages 142-172, September.
    10. Krapl, Alain A., 2015. "Corporate international diversification and risk," International Review of Financial Analysis, Elsevier, vol. 37(C), pages 1-13.
    11. Madhusmita Bhadra & Doyeon Kim, 2023. "Income elasticity of demand and stock market beta," International Finance, Wiley Blackwell, vol. 26(2), pages 225-240, August.
    12. David B. Smith, 1983. "A Framework For Analyzing Nonconvertible Preferred Stock Risk," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 6(2), pages 127-139, June.
    13. Qadan, Mahmoud & Aharon, David Y., 2019. "Can investor sentiment predict the size premium?," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 10-26.
    14. Osama Wagdi & Yasmeen Tarek, 2019. "The impact of financial risk on systematic risks: international evidence," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(6), pages 1-11.
    15. Sarmiento-Sabogal, Julio & Sadeghi, Mehdi, 2014. "Unlevered betas and the cost of equity capital: An empirical approach," The North American Journal of Economics and Finance, Elsevier, vol. 30(C), pages 90-105.
    16. Elshandidy, Tamer & Fraser, Ian & Hussainey, Khaled, 2013. "Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 320-333.
    17. William S. Hopwood & Thomas F. Schaefer, 1988. "Incremental information content of earnings†and nonearnings†based financial ratios," Contemporary Accounting Research, John Wiley & Sons, vol. 5(1), pages 318-342, September.
    18. Gupta, Pankaj & Mittal, Garima & Mehlawat, Mukesh Kumar, 2013. "Expected value multiobjective portfolio rebalancing model with fuzzy parameters," Insurance: Mathematics and Economics, Elsevier, vol. 52(2), pages 190-203.
    19. Anders Johansson, 2009. "An analysis of dynamic risk in the Greater China equity markets," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(3), pages 299-320.
    20. Lin, Sheng-Hau & Zhao, Xiaofeng & Wu, Jiuxing & Liang, Fachao & Li, Jia-Hsuan & Lai, Ren-Ji & Hsieh, Jing-Chzi & Tzeng, Gwo-Hshiung, 2021. "An evaluation framework for developing green infrastructure by using a new hybrid multiple attribute decision-making model for promoting environmental sustainability," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).

    More about this item

    Statistics

    Access and download statistics

    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:taf:jbemgt:v:15:y:2014:i:3:p:509-529. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TBEM20 .

    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.