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Applying Mpca Analysis To Evaluate Financial Performance Of Romanian Listed Companies

Author

Listed:
  • Victoria Bogdan

    (University of Oradea)

  • Olimpia Iuliana Ban

    (University of Oradea)

  • Dorina Nicoleta Popa

    (University of Oradea)

Abstract

The paper aims to investigate the main determinants of financial performance of Romanian companies using principal component analysis technique (PCA) for the year 2015 by constructing a composite index of financial performance and revealing also the main groups of companies according to their performance using cluster analysis technique. For this, the methodology of building composite indices proposed by the OECD (2008) will be applied. Furthermore, the sample used in the analysis covers a number of 57 companies from 8 economic sectors at the level of 2015. The analysis used 11 financial accounting indicators: market value added (MVA), added liquid value / credit valuation adjustment (CVA), weighted average cost of capital (WACC), earnings per share (EPS), price earnings ratio (PER), dividend per share (DPS), return on assets (ROA), return on equity (ROE), share of intangible assets (intangible investments) in total turnover (ITO), global solvency (SOL) and current liquidity (CL). Data was collected from the annual financial statements published on the websites of the sampled companies or through the BSE website. The empirical results of MPCA analysis revealed that the financial indicators such as return on assets, share of intangible assets (intangible investments) in total turnover, added market value and global solvency as well as current liquidity are the main determinants of financial performance of Romanian companies. Analyzing the main groups of companies according with their financial performance for the year 2015, the cluster analysis pointed out the existence of two main poles of financial performance: S.N.T.G.N. TRANSGAZ and PETROLEXPORTIMPORT, leaders in their sectors.

Suggested Citation

  • Victoria Bogdan & Olimpia Iuliana Ban & Dorina Nicoleta Popa, 2017. "Applying Mpca Analysis To Evaluate Financial Performance Of Romanian Listed Companies," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 235-246, July.
    • Handle: RePEc:ora:journl:v:1:y:2017:i:1:p:235-246
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    References listed on IDEAS

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    Cited by:

    1. Victoria BOGDAN & Dorina Nicoleta POPA & Mărioara BELENEŞI, 2022. "An Empirical Study On The Influences Of Accounting Policies, Organizational Climate, And Financial Reporting Disclosures On The Performance Of Non-Financial Listed Companies," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 2(2), pages 164-175, December.

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    More about this item

    Keywords

    financial performance; business reporting; Romanian listed companies; indicators; cluster analysis;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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