An Evaluation of the Performances of Foreign Capital Trade Companies in Bist and the Sustainability Index through the TOPSIS Method

Abstract

The relationship between the financial performances of firms and the stock return has been frequently subject to examination in the literature. Realistic manifestation of these relationships is particularly guiding for decisions to be made by investors, stakeholders and managers. In this study, the performance ranking of the companies was conducted using the TOPSIS method, which is one of the multi-criteria decision making models, by questing whether there is any difference in the performances of Foreign Trade Capital Companies of B?ST and Sustainability Index. The method builds a performance ranking of companies according to their proximity and distance to the ideal solution. The necessary data are obtained from the financial statements of the companies by assuming that the significance level of the financial ratios used in the performance measurement is equal, and analyses were run with the relevant financial ratios. Furthermore, various types of weightings made by the entropy weighting method and based on expert opinions did not change the ranking. The ranking of companies according to their performances and the identification of the direction of the relationship between them as to share returns are of vital importance for both companies and stakeholders. Findings will make a significant contribution to the companies in this sector in strategy determination. On the other hand, the results indicate that taking part in the sustainability index will also have a guiding impact on investors' stock preferences.

Keywords: TOPSIS Model, Performance Evaluation, ?stanbul Stock Exchange, Sustainability Index