A comparative study on financial positions of shipping companies in Taiwan and Korea using entropy and grey relation analysis

Abstract

The international trade of Korea and Taiwan has been heavily dependent upon international seatransportation owing to geo-political aspects. Therefore, the two countries have exerted to develop and promote ocean-going shipping industry in order to support their economies. Recent financial crisis in together with the economic slowdown has reduced seaborne trade cargoes, which resulted in remarkably deteriorated revenues of the container shipping sector. Major container shipping companies of both countries such as Evergreen, Yang Ming, Hyundai, and Hanjin under our study are no exception. This paper intends to achieve two-fold aims. The first applies entropy to find the relative weights of financial ratios of the four companies each year. In so doing, we can find the weights variance for the period of 1999–2009 based on the financial performance of the above companies. The second is to rank the companies in the period by grey relation analysis. On the basis of findings in this paper, we suggest business policy implications to mitigate impacts of the financial tsunami in the context of world shipping area.