An Alternative Sensitivity Analysis for the Evaluation of MCDA Applications: The Significance of Brand Value in the Comparative Financial Performance Analysis of BIST High-End Companies
Round 1
Reviewer 1 Report
Comments and Suggestions for Authors1. It is incorrect to use the term big data in this article.
2. In the second paragraph of the introduction it was suggested to analyze changes in the sensitivity of methods. However, the conclusion is only the identification of the best method - FUCA. It would be reasonable to supplement the paper with an analysis of situations where this method performs poorly and what conclusions can be drawn from it.
Author Response
Response to Reviewer 1:
We thank Reviewer 1 for his/her comments and insights. The changes and responses to the issues Reviewer 1 has pointed out are listed below.
Comment 1. It is incorrect to use the term big data in this article.
Reply: In this study, the term big data was preferred to emphasize the size of the data employed over 10 years for 31 companies with 8 criteria. However, the term big data has also been used to refer to complex and poorly structured data. To that end, at the request of Reviewer 1, the term big data was removed from the article.
Comment 2. In the second paragraph of the introduction it was suggested to analyze changes in the sensitivity of methods. However, the conclusion is only the identification of the best method - FUCA. It would be reasonable to supplement the paper with an analysis of situations where this method performs poorly and what conclusions can be drawn from it.
Reply: As per the request of Reviewer 1, in fourth section of the article, we added another sensitivity analysis with 8 different scenarios specifically for FUCA, which was identified as the most capable method in this financial performance study. According to the innovative sensitivity analysis applied in this study, FUCA method realized the highest capacity in the scenario which has the highest weightage for M-to-B and the lowest capacity in the scenario which has a highest weightage for ROE. Nevertheless, it should be noted that the association between FUCA and stock returns in the scenario with the lowest capacity is 36.2%, which is still higher than the capacity of all other methods calculated by CRITIC and Standard Deviation techniques as shown in the earlier part of the same section of this study. This finding once again demonstrated the superiority of FUCA over the other analyzed methods, in terms of financial performance analysis. Besides, brand value scenario outperformed the aforementioned ROE scenario and signified the advantageous dimension of its implementation in financial performance studies with MCDAs. In this sense, it has been found that FUCA reacts more positively to market-based ratios, which are of critical importance in finance studies, than to accounting-based ratios.
Reviewer 2 Report
Comments and Suggestions for AuthorsThis manuscript focuses on Multi-criteria Decision Analysis (MCDA) applications, which encompass techniques facilitating decision-makers in making informed decisions in scenarios involving multiple alternatives and criteria. The study analyzes the financial performance of 31 companies with the highest brand value in Turkey, traded on Borsa Istanbul, from 2013 to 2022.. This research contributes to the field by introducing an alternative sensitivity analysis methodology within the context of MCDA and emphasizes the importance of considering brand value in decision-making processes.. The manuscript demonstrates promise, but there are some aspects that could be strengthened.
1. The author employed seven methods (FUCA, VIKOR, TOPSIS, SAW, CODAS, RAFSI, and GRA) in the analysis. However, for end-users, determining which method to use or how to integrate these seven methods can be challenging. It is suggested that the author include a discussion on this aspect to provide guidance or insights for users facing such decisions.
2. The article's marginal contribution or innovation is not prominently highlighted. The literature review section lacks a detailed analysis of existing research, including a discussion of its limitations. Our study aims to advance upon the existing literature by proposing additional marginal contributions or innovations. It is advised that the author enhances the first or second section of the paper to underscore the marginal contribution or research innovation. Furthermore, the author should provide a clearer exposition of the research motivation, as the current description on this aspect is limited to a single sentence. Lastly, it is suggested that the author refers to the following literatures and systematically reviews them.
[1] Yueh-Hsia Huang, Lan Sun, Tyng-Bin Ger (2023). An analysis of enterprise resource planning systems and key determinants using the Delphi method and an analytic hierarchy process. Data Science in Finance and Economics, 3(2): 166-183.
[2] Zhenghui Li, Zimei Huang, Yaya Su (2023). New media environment, environmental regulation and corporate green technology innovation: Evidence from China. Energy Economics, 119, 106545.
[3] Muhammad Zubair Mumtaz, Naoyuki Yoshino (2023). Aftermarket performance of green IPOs and portfolio allocation. Green Finance, 5(3): 321-342.
3. On page 6, in line 297, Formula (7) could be converted to an inline formula.
4. The structure of the article requires adjustment, particularly in the current version where the content of Section 5 is insufficient. It is recommended to expand the content of Section 5 by including more conclusive findings from the research. This adjustment will contribute to a more comprehensive and balanced presentation of the study's outcomes.
5. I would suggest proofreading the manuscript to correct some grammatical and singular/plural errors, and improve the overall language quality.
Comments on the Quality of English LanguageMinor editing of English language required!
Author Response
Response to Reviewer 2:
We would like to thank the reviewer for his/her comments on our article. The revisions made and the answers we have given regarding the issues Reviewer 2 stated about the manuscript are listed below.
Comment 1. The author employed seven methods (FUCA, VIKOR, TOPSIS, SAW, CODAS, RAFSI, and GRA) in the analysis. However, for end-users, determining which method to use or how to integrate these seven methods can be challenging. It is suggested that the author include a discussion on this aspect to provide guidance or insights for users facing such decisions.
Reply: There are over 200 methods in the MCDA literature and these methods differ from each other in terms of normalization, ranking criteria and mathematical background. However, there is no one method that gives the most successful results in all real-life scenarios. Thus, it is important to choose a method that will assist stakeholders in making critical financial decisions. In this sense, 7 methods that are frequently used in the financial performance literature are compared by subjecting them to an innovative sensitivity analysis. The study has two main motivations. The first one is to integrate brand value, which has an increasing importance in finance research, into financial performance analysis with MCDA applications for the first time, and the second one is to propose the most successful method with a different sensitivity analysis. To this end, the study itself is built on providing insights and a roadmap for financial stakeholders who are already struggling to choose which method to apply. Still, necessary additions have been made to the “Discussion” section, at the request of Reviewer 2.
Comment 2: The article's marginal contribution or innovation is not prominently highlighted. The literature review section lacks a detailed analysis of existing research, including a discussion of its limitations. Our study aims to advance upon the existing literature by proposing additional marginal contributions or innovations. It is advised that the author enhances the first or second section of the paper to underscore the marginal contribution or research innovation. Furthermore, the author should provide a clearer exposition of the research motivation, as the current description on this aspect is limited to a single sentence. Lastly, it is suggested that the author refers to the following literatures and systematically reviews them.
[1] Yueh-Hsia Huang, Lan Sun, Tyng-Bin Ger (2023). An analysis of enterprise resource planning systems and key determinants using the Delphi method and an analytic hierarchy process. Data Science in Finance and Economics, 3(2): 166-183.
[2] Zhenghui Li, Zimei Huang, Yaya Su (2023). New media environment, environmental regulation and corporate green technology innovation: Evidence from China. Energy Economics, 119, 106545.
[3] Muhammad Zubair Mumtaz, Naoyuki Yoshino (2023). Aftermarket performance of green IPOs and portfolio allocation. Green Finance, 5(3): 321-342.
Reply: There were few MCDA studies on brand value. Moreover, brand value has never been used as a criterion in previous financial performance studies. This situation already constitutes the research motivation of this study. In this sense, limited studies on brand value were given in the literature review section. Since the literature on the applied methods and techniques was already given in the methodology section, it was not given in the literature review section in order not to be repetitive and not to take the study off its axis. Instead, the place of brand value in the literature, which constitutes the motivation for the research, was explained thoroughly. In addition, upon the Reviewer's request, the research motivation was added to the “Introduction” section and the contributions of the study were added to the “Literature Review” section.
Comment 3. On page 6, in line 297, Formula (7) could be converted to an inline formula.
Reply: Formula 7 is repositioned as an inline formula, as per the requests of the Reviewer 2.
Comment 4. The structure of the article requires adjustment, particularly in the current version where the content of Section 5 is insufficient. It is recommended to expand the content of Section 5 by including more conclusive findings from the research. This adjustment will contribute to a more comprehensive and balanced presentation of the study's outcomes.
Reply: In an MCDA study on financial performance, brand value was integrated into the analysis as a criterion for the first time. Moreover, in the extensive research and innovative sensitivity analysis, the FUCA method stood out as the most successful method. These important details are expanded upon in the discussion section. In addition to these, since a new sensitivity analysis has been added to the study according to 8 different scenarios regarding FUCA, which stood out as the most superior method analyzed in both classical and innovative sensitivity analyses, important findings related to these new results were also included in the discussion section. Thus, the details that will reveal the importance of the study and its place in the literature more clearly have been integrated into the study upon the requests of Reviewer 2.
Comment 5. I would suggest proofreading the manuscript to correct some grammatical and singular/plural errors, and improve the overall language quality.
Reply: The entire article was proofread again and any grammatical errors detected were corrected upon the request of Reviewer 2.
Reviewer 3 Report
Comments and Suggestions for AuthorsThis study investigates an alternative sensitivity analysis for the evaluation of MCDA
applications. The issue under consideration is brand value. After carefully reading the paper, I can say that it was clearly introduced, adequately presented, especially in relation to the application part and was adequately referenced. The paper is well structured and the goals have been achieved. I have only one concern; that is the extent of application on other weaker, diverse or multi-business brands; in other words, those brands which are subject to "constant" fluctuations resulting from the ever-evolving market dynamics. We all know that in our recent times, the business environments are extremely volatile and changing; so how can we make sure that this analysis assures issues of change, volatility of marketplaces, and other market dynamics. I liked that the authors touched on the concept of uncertainty, but they did not give equal attention to "sustainability" and "risk". They briefly touched on the issue of risk, whereas I believed in sould have been integrated more deeply in the paper. Finally, the authors should discuss how can this analysis be applied more extensively in other markets other than Turkey and within those markets that are characterised as being more volatile and the brands which are newly introduced to the market. I believe that the use of the "BCG" matrix can be value adding as a method of classifying the different brands.
English is fine. Only a few typos were spotted. I think one more round of proof reading will be enough.
Author Response
Response to Reviewer 3
We humbly thank the reviewer for his/her comments on our article. The issues addressed regarding the technical propositions Reviewer 3 stated about the article are listed below.
Comment 1: This study investigates an alternative sensitivity analysis for the evaluation of MCDA applications. The issue under consideration is brand value. After carefully reading the paper, I can say that it was clearly introduced, adequately presented, especially in relation to the application part and was adequately referenced. The paper is well structured and the goals have been achieved. I have only one concern; that is the extent of application on other weaker, diverse or multi-business brands; in other words, those brands which are subject to "constant" fluctuations resulting from the ever-evolving market dynamics. We all know that in our recent times, the business environments are extremely volatile and changing; so how can we make sure that this analysis assures issues of change, volatility of marketplaces, and other market dynamics.
Reply: In this study, unlike the financial performance studies conducted with previous MCDA applications, brand value was used as a criterion. In this sense, large firms operating in Turkey and listed on Borsa Istanbul were analyzed. The reviewer's opinion on small and risky firms is interesting. However, the already stated limitation of this study is that it was conducted with the corporations with the strongest brand value. This is the first time that the impact of brand value on the financial performance of large firms has been observed in an MCDA study. The brand value of small firms can fluctuate significantly, as the Reviewer 3 stated, for many reasons. Moreover, financial stakeholders invest in the stocks of small companies not because of their brand value, but because of their risk-premium as it is marginally higher than bigger firms, thus this phenomenon gives them and advantage to earn more. Additionally, the brand values of companies with small brand values were not regularly published by valuation companies. For this reason, it was not included in this study as a homogeneous comparison could not be made due to incomplete data. Nevertheless, a future study covering the brand value of small companies would contribute to the literature in terms of comparability. So, the “Limitation” section was expanded, as per the requests of Reviewer 3.
Comment 2: I liked that the authors touched on the concept of uncertainty, but they did not give equal attention to "sustainability" and "risk". They briefly touched on the issue of risk, whereas I believed in should have been integrated more deeply in the paper.
Reply: Since the motivation of this study is the importance of brand value in MCDA applications focusing on financial performance analysis together with the innovative sensitivity analysis, "sustainability" is less included in the article. In the future, the authors aim to conduct financial performance studies with MCDA applications that focus on the sustainability factor, which is becoming more critical each passing day. Still, in this study, the brand values determined by Brand Finance for companies are preferred because the relevant valuation company bases its brand valuations on “sustainability”. Thus, in the study conducted, sustainability was included in the brand value parameter and this situation was explained in the "Literature Review" section. Regarding risk, we can especially mention the following remarks. In this study, a period of 10 years, including before and after the pandemic, was analyzed. During this period, emerging markets and also world's leading markets, were significantly affected by the pandemic. To that end, a long period was analyzed in order to observe the volatility of risk in an emerging capital market. In addition, after the pandemic, the inflation felt around the world has increased significantly. The post-pandemic inflation, which was even higher after the pandemic due to the monetary policy changes implemented in Turkey, affected all firms (big and small) operating in this country. In this sense, the preference for firms operating in Turkey makes this study even more valuable. Thus, the specialty of the market has been added into the “Discussion” section, in line with the requests of Reviewer 3.
Comment 3: Finally, the authors should discuss how can this analysis be applied more extensively in other markets other than Turkey and within those markets that are characterised as being more volatile and the brands which are newly introduced to the market. I believe that the use of the "BCG" matrix can be value adding as a method of classifying the different brands.
Reply: Since this study was not a valuation study and valuation companies usually publish the brand values of large companies on a regular basis, small companies could not be included in the scope of the study. Turkey was chosen because it is a developing country that has experienced significant volatility, especially during the pandemic. Using the same framework of this study, the financial performance of companies traded in developed and emerging markets according to their brand equity can be examined comprehensively with MCDA applications. With respect to smaller companies, there were MCDA studies especially on the financial performance of initial public offering firms. As it is known, the age of initial public offering firms is small and especially the first years of trading on the stock exchange is volatile for this kind of companies. Although brand value was not used in these aforementioned studies, the most pivotal criterion was found to be M-to-B ratio. This present study, on the other hand, revealed that brand value has a vital place in financial performance analysis with MCDA applications. In future studies, a comparative analysis can be made by making a country-based classification for companies with large brand value operating in different countries. In addition, BCG matrix was not used since the analyzed companies are not in the same sector. However, the change in the sectors of the most successful companies before and after the pandemic has been added to section 4, in line with the request of Reviewer 3.
Comment 4: English is fine. Only a few typos were spotted. I think one more round of proof reading will be enough.
Reply: In addition, at the request of Reviewer 3, the entire manuscript was proofread and grammatical errors were corrected.
