Financial risk evaluation of investment companies in Tehran Stock Exchange with fuzzy decision-making method D-CRITIC and EDAS based on a new score function
Subject Areas : Stock Exchange
Mehdi Aghabeigi
1
(
Department of Accounting, Malekan Branch, Islamic Azad University, Malekan, Iran
)
Ekhtiar Khodadadi
2
(
Department of Mathematics, Malekan Branch, Islamic Azad University, Malekan, Iran
)
Keywords: Multi-Criteria Decision Making, Pythagorean Fuzzy Set, Financial Risk, EDAS, D-CRITIC,
Abstract :
Financial risk evaluation of companies is crucial to identify potential financial risks, provide a decision basis for senior chief financial officer, and prevent and reduce risk losses. In evaluating the financial risk of companies, the basic issue is related to uncertainty and inaccuracy. In this research, in order to evaluate the financial risks of companies in the Tehran Stock Exchange, we use group decision-making methods. The Pythagorean fuzzy set (PFS), which is depicted by degrees of membership and non-membership, is a new and more effective tool for dealing with ambiguity. In this paper, a new Pythagorean fuzzy score function is presented to solve the comparison problem. In addition, we present composite weights that reflect both subjective and objective preferences. Then, the weight of the criteria and the correlation between the pair of criteria by D-CRITIC, and the prioritization of financial risk of companies by the EDAS method (Evaluation Based on Distance from Average Solution) based on the new score function are calculated. This method is very useful when we have conflicting criteria. Finally, we express the feasibility of the algorithm to evaluate the financial risk of four investment group with six criteria with the corresponding sensitivity analysis.
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