Analysis of decision making factors for equity investment by DEMATEL and Analytic Network Process

Authors:
Wen-Shiung Lee;Alex YiHou Huang;Yong-Yang Chang;Chiao-Ming Cheng
Affiliations:
Department of Business Administration, Tamkang University, 151 Ying-chuan Road, Tamsui, Taipei 25137, Taiwan;College of Management, Yuan Ze University, 135 Yuan-Tung Road, Chung-Li, Taoyuan 32003, Taiwan;Department of Business and Entrepreneurial Management, Kainan University, 1 Kainan Road, Luzhu Shiang, Taoyuan 33857, Taiwan;College of Management, Yuan Ze University, 135 Yuan-Tung Road, Chung-Li, Taoyuan 32003, Taiwan
Venue:
Expert Systems with Applications: An International Journal
Year:
2011

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Abstract

Existing methodologies of equity investment, such as fundamental analysis, technical analysis, and institutional investor analysis, explore important factors of stock price behaviors. However, the interdependent relationships of the key factors have not yet been fully studied. This paper provides the first analysis on the interactive relationships among the factors in incorporating the methods of Decision Making Trial and Evaluation Laboratory (DEMATEL) and Analytic Network Process (ANP). The empirical results show that factors from the existing analytical methodologies have significant interactive and self-feedback dynamics. Among the key factors, profitability is the most important one affecting investment decision, followed by growth and trading volume. In addition, due to the complexity of the ANP, this study proposes a new methodology to simplify the process, and empirical evidences indicate that the approach is effective and efficient.