Financial performance index of IPO firms using VIKOR-CRITIC techniques

Abstract

Investments in IPO markets are becoming increasingly complex because of the uncertain information and contradictory criteria that needs to be considered during the decision-making process. The main aim of this paper is to apply the Multi-Criteria Decision-Making Technique (MCDM) in order to improve the quality of the financial decision-making process and the quality of the resulting choices. This paper empirically evaluates the performance of IPO firms listed on the Saudi Stock Market using the accounting and value-based financial measures in ‘pre- and post-IPO period’, ranking them using the combined approach of objective weighting method (CRITIC) and the multi-criteria decision-making technique (VIKOR). The ranking list generated through the VIKOR_CRITIC approach will enable investors to identify the best ranked IPO firms and also allow them to make inter-firm comparisons based on the important representative measures drawn from a complex set of financial performance criterion. The combined VIKOR_CRITIC approach used in this study yielded favorable results and it ranked Saudi Airlines Catering Co., Saudi Co. for Hardware and Saudi Ground Services as the best performing IPO firms.