Performance Evaluation of enlisted firms based on their Corporate Structure (CS): A Comparative Analysis of TOPSIS and MOORA Methods, European Journal of Operational Research (In Progress)

Abstract

Due to an increased awareness and significant pressures from various shareholders, firms have begun to realize different levels of performance regarding their ownership status. Also, Board of Directors (BoD) independence indicators are gradually used as factors of firms’ viability and efficiency. In this study we develop a performance evaluation model for 284 enlisted firms that include financial and other supplementary criteria. We propose a framework using the TOPSIS (Technique for Order Preference by Similarity to Ideal Solution) method and three main trends of MOORA (Multi-Objective Optimization on Basis of Ratio Analysis) method with equal criteria weights to calculate firms’ performance scores. We propose a two-stage method: first, Multicriteria Analysis is used to rank firms on their financial and business performance dimensions; second, these rankings are used to assess the relationships of different dimensions in firms’ ownership status. The results of the proposed framework are compared with the ranks obtained by the methods used in the study. Then a Kendal’s tau correlation test is used to find the statistical difference between different rankings taken by the four methods implemented. Finally, analysis is performed to examine core characteristics of firms’ performance regarding their Corporate Structure in terms of their Ownership status.

Keywords: TOPSIS method, MOORA, Ratio System MOORA, Reference Point MOORA, Full Multiplicative MOORA, Board Independence, Multinational Firms, Performance Evaluation, Corporate Structure, Corporate Governance.