Top Companies Ranking Based on Financial Ratio with AHP-TOPSIS Combined Approach and Indices of Tehran Stock Exchange - A Comparative Study

Abstract

This paper aims to explore the relationship between ranking of the top-50 listed companies on Tehran Stock Exchange (TSE) for the years 2009-2011 in terms of their liquidity, operation, leverage and profitability ratios using combined AHP-TOPSIS approach and the ranking made by the stock exchange. Ranking of the companies on the stock exchange is done based on their state in terms of the above ratios and it serves as a criterion for decision making on investment. Using a questionnaire, views of experts, scholars and the capital market authorities on the effect of financial ratios were gathered and then using AHP-TOPSIS technique the companies were ranked based on these ratios. The obtained results from the Spearman Test show a weak correlation between the rankings based on AHP-TOPSIS approach and the ranking of the stock exchange. Finally, our results indicate that financial ratios of the top stock exchange selected companies are crucial factors in investment and ranking. This paper contributes to a signaled need for investigation on how and why financial statements of top listed companies cannot be regarded as a critical factor in ranking and decision making on investment.

Evaluation of Iranian Chemical Industries

“…Rahdari [4] studied the connections among three major criteria such as corporate governance, corporate social responsibility, and corporate financial performance via AHP-TOPSIS in the Iranian petrochemical industry as a case study that resulted to offer a weighting system along with the ranking of alternatives. Hosseini, et al [5] weighed and ranked around fifty large industries on Tehran Stock Exchange depending on some criteria such as liquidity, operation, and profitability and leverage ratios via the TOPSIS model and questionnaire procedures since 2009-2011. Onat, et al [6] used the TOPSIS model to rank and weigh the existing sustainability efficiency of alternative vehicles via expert opinion and experience and data collection by questionnaire methods.…”

Determination of the Optimal Retention Level Based on Different Measures

“…References to the TOPSIS method for real data can be found in a number of studies, including Wang and Hsu [29], Wu and Olson [30], Shih et al [31], Jahanshahloo et al [32], Bulgurcu [33], Zhu et al [34] and Hosseini et al [35].…”

Optimal reinsurance under multiple attribute decision making

“…Examples of financial studies include Wu & Olson (2006) who presented a set of loan cases from Canadian banking for credit scoring using the TOPSIS method with 12 attributes depending on assets, earnings, equity and tax, and Hosseini et al . (2013) who explored the relationship between ranking of the top 50 listed companies on the Tehran Stock Exchange for the years 2009–2011 in terms of their liquidity, operation, leverage and profitability ratios.…”