Comprehensive Ranking Model of Companies via Accounting Information, Balanced Scorecard and PAPRIKA Technique

Abstract

This study aims to provide a comprehensive ranking model of companies listed in the Tehran Stock Exchange (TSE), using accounting information, balanced scorecard and PAPRIKA technique. To do this, the important criteria in ranking studies were applied to103 firms in the TSE (1133 year-firm) during 2004-2014, using PAPRIKA technique. After recognition of principal factors by factor analysis based on KMO indexing and Bartlett’s test, rakings’ criteria were provided for the participants to determine their preferences, using 1000Minds software (PAPRIKA-based). Then, based on cumulative preferences, ranking of firms were provided in terms of three approaches of accounting information-based ranking, balanced scorecard-based ranking and combined ranking method. To test the hypothesis concerning the explanatory power of approaches, using regression analysis and the scores from the PAPRIKA technique as dependent variable and the criteria from the three approaches as explanatory variables, the mathematical models of the approaches were specified, and the explanatory power and accuracy of them, supported by Vuong test, compared with each other. The findings indicated that the explanatory power and accuracy of the balanced scorecard-based ranking model, and the combined model are significantly greater than the accounting-based ranking model. Also, the explanatory power and accuracy of the combined model are significantly greater than the balanced scorecard-based ranking model. Thus, the combined model represents great advantages in comparison with the two other models.

Keywords

• firms’ ranking
• accounting information
• balanced scorecard
• paprika technique
• tehran stock exchange