Evaluating and Ranking the Firms in Chemical Industry Listed in Tehran Stock Exchange with TOPSIS

Document Type: Research Paper

Authors

1 aFaculty of Management & Economics, University of Tarbiat Modares, Tehran, Iran

2 Faculty of Economics & Accounting, University of Islamic Azad south Tehran, Tehran, Iran

3 Department of Management, University of Alzahra, Tehran, Iran

Abstract

Due to the sublimation and perfection of human knowledge in economics, the concept of efficiency developed in the past two decades and the measurement of it, based on different theories and practice. In economics, efficiency means the maximum of possible output from a certain amount of input. The efficiency is very important for developing countries Because these countries face to a shortage of inputs, production factors and technologies. So the usage of existing resources is critical for these countries. This paper aims to evaluate and rank the financial performance of the chemical firms listed in Tehran stock exchange. We Use the data environment analysis and TOPSIS methods. This research includes one major question that which company performs better due to the financial ratios. The sample includes the firms in Tehran Stock Exchange within a 3-year period (2013-2015). The Results show that Ahvas Petrochemical company, Persian Gulf Petrochemical Industry company and Iran Chemical Industries company are more efficient than others.

Keywords


[1]  Chung, R., Firth, M., Kim, J.B., Earnings Management, Surplus Free Cash Flow, and External Monitoring, Journal of Business Research, 2005, 58, P.766 –776.

[2]  Cooper, S., Davis M.,  Maximizing Shareholder Value, CIMA, 2004.

[3]  Dechow, P.M., Sloan, R., Sweeny, A., Detecting EarningsManagement, The Accounting Review, 1995, 70(2), P.193-225.

[4]  Healy, P.M., Wahlen, J.M., A Review of the Earnings Management Literature and its Implication for Standards Setting, Journal of Accounting Horizons , 1999, 13(4), P.365-373.

[5]  Jaggi, B., Gul, A., Evidence of Accrual Management: A Test of the Free cash flows and debt Monitoring Hypothesis , Working  Paper , www.ssrn.com., 2000.

[6]  Jensen , M.C., Agency costs of free cash flow , corporate finance and takeovers, American economic review, 1986,76(2), P.323-329.

[7] Jones, S., Rohit, Sh., The Impact of Free Cash Flow, Financial Leverage  and Accounting Regulation on Earnings Management in Australia’s ‘Old’ and ‘New’ Economies, Managerial Finance, 2001, 27(12), P.18-39.

[8]  Lehn, K., Annete, P., Free Cash Flow and Stock Holder Gains in Gohng Private Transactions, The Journal of Finance, 1986, 44 (3), P.771-787. 

[9]  Rappaport, A., Creating Shareholder Value:A Guide for Managers and Investors Revised and Updated, New York, The Free Press, 1998.

[10] Hwang, C.L., Yoon, K., Multiple Attribute Decision Making: Methods and Applications, New York: Springer-Verlag, 1981.

[11] Matsumoto, K., Shivaswamy, M., Hoban J., James P., Security Analysts' Views of the Financial Ratios of Manufacturers and Retailers, Financial Practice and Education, 1995.

[12] Horrigan, J.O., Some empirical bases of financial ratio analysis, The Accounting Review, 1965, 40(3), P.558-568.

[13] Altman, E. I., Financial ratios, discriminant analysis and the prediction of corporate bankruptcy, The Journal of Finance, 1968, 23(4), P.589-609.

[14] Abramovitz, M., Resource and output trends in the United States since 1870, Resource and output trends in the United States since 1870, 1956, 36, P.1-23.

[15] Solow, R.M., Technical change and the aggregate production function, The review of Economics and Statistics,1957, 22, P.312-320.

[16] Klette, T. J., Griliches Z., The inconsistency of common scale estimators when output prices are unobserved and endogenous, Journal of Applied Econometrics, 1996, 37, P.343-361.