##plugins.themes.bootstrap3.article.main##

##plugins.themes.bootstrap3.article.sidebar##

Published Mar 27, 2017
Neşe YALÇIN Ulaş ÜNLÜ

Abstract

As Initial Public Offering (IPO) is a significant milestone in the financial strategy of a firm, this study aims to evaluate performance of IPOs using multiple measures including account­ing-based performance (ABP), value-based performance (VBP) and overall performance (OP) in the pre-and post-IPO periods. Therefore, we present two combined approaches based on a compromise MCDM method-VIKOR and objective weighting methods-CRITIC and MW (Mean Weight) to evaluate and rank IPOs to help shareholders with understanding on how their performance changes under the different measures. Since the compromise solution (one or a set) proposed by VIKOR depends substantially on criteria weights, VIKOR-CRITIC can show more realistic results because of the differential weights assigned to criteria by CRITIC. In this study, a case study is con­ducted in order to evaluate the performance of Turkish IPOs based on ABP, VBP and OP measures using the combined methods. The results show that the compromise solution results obtained by VIKOR-CRITIC may be a guideline for investors in making more profitable investment decisions before leaping into any investment decision.

##plugins.themes.bootstrap3.article.details##

Keywords

initial public offering, accounting-based performance, value-based performance, MCDM, VIKOR, CRITIC, objective weights

References
Aalianvari, A.; Katibeh, H.; Sharifzadeh, M. 2012. Application of fuzzy Delphi AHP method for the estimation and classification of Ghomrud tunnel from groundwater flow hazard, Arab Journal of Geosciences 5(2): 275–284. https://doi.org/10.2307/3665964

Ahn, B. S. 2011. Compatible weighting method with rank order centroid: maximum entropy ordered weighted averaging approach, European Journal of Operational Research 212(3): 552–559. https://doi.org/10.1108/17538391111144533

Bacidore, J. M.; Boquist, J. A.; Milbourn, T. T.; Thakor, A. V. 1997. The search for the best financial performance measure, Financial Analysts Journal 53(3): 11–20. https://doi.org/10.3846/20294913.2012.656151

Bayrakdaroğlu, A.; Yalçın, N. 2012. Strategic financial performance evaluation of the Turkish Companies Traded on ISE, Ege Academic Review 12(4): 529–539. https://doi.org/10.1108/K-01-2014-0019

Chacko, G.; Evans, C. L. 2014. Valuation-methods and models in applied corporate finance. New Jersey: Pearson Education Inc. Press.

Chen, G. M.; Firth, M.; Kim, J.-B. 2000. The post-issue market performance of initial public offerings in China’s new stock markets, Review of Quantitative Finance and Accounting 14(4): 319–339. https://doi.org/10.1016/j.indmarman.2006.06.011

Chou, Y. C.; Yen, H. Y.; Sun, Y. Y. 2014. An integrate method for performance of women in science and technology based on entropy measure for objective weighting, Quality and Quantity 48(1): 157–172. https://doi.org/10.1016/S0305-0548(99)00069-6

Diakoulaki, D.; Mavrotas, G.; Papayannakis, L. 1995. Determining objective weights in multiple criteria problems: the CRITIC method, Computers and Operations Research 22(7): 763–770. https://doi.org/10.1016/j.eswa.2007.10.014

Gallizo, J. L.; Salvador, M. 2003. Understanding the behavior of financial ratios: the adjustment process, Journal of Economics and Business 55(3): 267–283. https://doi.org/10.1016/0304-405X(96)00884-7

Hsu, L.-C. 2014. A hybrid multiple criteria decision-making model for investment decision making, Journal of Business Economics and Management 15(3): 509–529. https://doi.org/10.3846/20294913.2013.876689

Hwang, C.-L.; Yoon, K. 1981. Multiple attribute decision making – methods and applications: a state-of-the-art survey. New York: Springer-Verlag. https://doi.org/10.1109/ICMIT.2012.6225775

Jahan, A.; Mustapha, F.; Sapuan, S. M.; Ismail, M. Y.; Bahraminasab, M. 2012. A framework for weight¬ing of criteria in ranking stage of material selection process, The International Journal of Advanced Manufacturing Technology 58(1–4): 411–420. https://doi.org/10.1111/j.1540-6261.1994.tb04778.x

Kang, D.; Park, Y. 2014. Review-based measurement of customer satisfaction in mobile service: senti¬ment analysis and VIKOR approach, Expert Systems with Applications 41(4): 1041–1050. https://doi.org/10.1016/0304-405X(89)90047-0

Kazan H.; Özdemir, Ö. 2014. Financial performance assessment of large scale conglomerates via TOP¬SIS and critic methods, Journal of Management and Sustainability 3(4): 203–224.

Kim, K. A.; Kitsabunnarat, P.; Nofsinger, J. R. 2004. Ownership and operating performance in an emerging market: evidence from Thai IPO firms, Journal of Corporate Finance 10(3): 355–381. https://doi.org/10.1016/j.ijhm.2009.01.004

Liu, H. C.; You, J. X.; You, X. Y.; Shan, M. M. 2015. A novel approach for failure mode and effects analysis using combination weighting and fuzzy VIKOR method, Applied Soft Computing 28: 579–588. https://doi.org/10.1016/j.matdes.2013.05.054

Loughran, T.; Ritter, J. R. 1995. The new issues puzzle, The Journal of Finance 50(1): 23–51. https://doi.org/10.3390/su8010037

Martin, J. D.; Petty, J. W. 2000. Value based management: the corporate response to the shareholder revolu¬tion. Boston: Harvard Business School Press.

Megginson, W. L.; Nash, R. C.; Randenborgh, M. V. 1994. The financial and operating performance of newly privatized firms: an international empirical analysis, The Journal of Finance 49(2): 403–452. https://doi.org/10.1016/S0304-405X(97)00006-8

Opricovic, S. 1998. Multi-criteria optimization of civil engineering systems: PhD dissertation. Belgrade, Faculty of Civil Engineering.

Opricovic, S. 2011. Fuzzy VIKOR with an application to water resources planning, Expert Systems with Applications 38(10): 12983–12990. https://doi.org/10.1016/S0377-2217(03)00020-1

Palepu, K. G.; Healy, P. M.; Bernard, V. L. 2000. Business analysis and valuation: using financial state¬ments. Cincinnati, Ohio: South-Western College Publishing.

Public Disclosure Platform. 2015. [online], [cited 10 January 2015]. Available from Internet: https://www.kap.org.tr/

Rekik, Y. M.; Boujelbene, Y. 2013. Tunisian IPOs underpricing and long-run underperformance: high¬light and explanation, Journal of Business Management and Economics 4(4): 93–104.

Republic of Turkey Prime Ministry Undersecretariat of Treasury. 2015. [online], [cited 10 January 2015]. Available from Internet: http://www.treasury.gov.tr

Rezaie, K.; Ramiyani, S. S.; Nazari-Shirkouhi, S.; Badizadeh, A. 2014. Evaluating performance of Iranian cement firms using an integrated fuzzy AHP–VIKOR method, Applied Mathematical Modelling 38(21–22): 5033–5046. https://doi.org/10.1111/j.1540-6261.1991.tb03743.x

Rostamzadeh, R.; Ismail, K.; Zavadskas, E. K. 2014. Multi criteria decision making for assisting busi¬ness angels in investments, Technological and Economic Development of Economy 20(4): 696–720. https://doi.org/10.3846/20294913.2014.913274

Shemshadi, A.; Shirazi, H.; Toreihi, M.; Tarokh, M. J. 2011. A fuzzy VIKOR method for supplier selec¬tion based on entropy measure for objective weighting, Expert Systems with Applications 38(10): 12160–12167. https://doi.org/10.1016/S0377-2217(97)00246-4

Urbanczyk, E.; Midoduchowska-Jaroszewicz, E.; Szczesna-Urbaniak, A. 2005. Economic value added versus cash value added: the case of companies in transitional economy, Poland, International Jour¬nal of Banking and Finance 3(1): 107–117.

Wang, C. 2005. Ownership and operating performance of Chinese IPOs, Journal of Banking and Finance 29(7): 1835–1856. https://doi.org/10.1016/j.rser.2009.06.021

Wang, Y. J. 2014. The evaluation of financial performance for Taiwan container shipping companies by fuzzy TOPSIS, Applied Soft Computing 22: 28–35. https://doi.org/10.1080/00405000701489412

Yalama, A.; Ünlü, U. 2010. The calendar anomalies in IPO returns: evidence from Turkey, Journal of Economics Business and Finance 25(286): 89–109.

Yalçın, N.; Bayrakdaroglu, A.; Kahraman, C. 2012. Application of fuzzy multi-criteria decision making methods for financial performance evaluation of Turkish manufacturing industries, Expert Systems with Applications 39(1): 350–364. https://doi.org/10.1016/j.eswa.2014.10.004

Young, S. D.; O’Byrne, S. F. 2001. EVA and value-based management: a practical guide to implementa¬tion. New York: McGraw-Hill.

Yu, P. L. 1973. A class of solutions for group decision problems, Management Science 19(8): 936–946. https://doi.org/10.3846/20294913.2011.593291

Zeleny, M. 1982. Multiple criteria decision making. New York: McGraw-Hill.
Section
Articles