An application of multiple attribute group decision making in ranking investors ’ concerns : A case study of Tehran Stock Exchange

Article history: Received October 9, 2012 Received in revised format 29 November 2012 Accepted 27 December 2012 Available online January 3 2013 During the past few years, stock exchange investors confront numerous problems in terms of legal, environmental issues, etc. In this paper, we present an empirical study to detect important issues as barriers for investment in Tehran Stock Exchange. The study has categorized the issues into two groups of real world and legal issues. Since there are different issues involved as major barriers, the study uses analytical hierarchy process to rank them. The study extracts 18 important factors, which influence investors’ participation in Tehran Stock Exchange and using Borda method, prioritize them. The results of the survey indicate that in terms of real issues, Increase in quality of firms Financial Statement is number one priority followed by Increase stock exchange and agents’ proficiency and electronic equipment, Unchangeable investment market rules and bounding organization managers to flow them and Strict supervision on agents’ activities. In terms of legal issues, good supervision of provisions to force firms to reveal information correctly and restrict their secret bargaining is the most important factor followed by Using indirect investment guideline instead of direct investment, Increase in quality of firms’ Financial Statement and Investors’ training toward their rights. © 2013 Growing Science Ltd. All rights reserved.


Introduction
One of the most important issues in any economy is to direct people's saving into stock exchange in order to boost the economy.In fact, when people participate in investing through stock exchange, they contribute to global economy.In United States, over 70% of people's savings are held as investment on shares traded in stock market.However, in Iran, many people are unwilling to invest their savings in Tehran Stock Exchange and they prefer to direct their money into real-state, gold, etc.Therefore, it is important to learn more about the possible barriers or lack of motivation and plan for possible actions to remove them.
During the past few years, there have been different studies associated with major issues surrounding Tehran Stock Exchange.VakilAlroaia et al. (2012), for instance, performed an empirical investigation on relationship between forward-backward factors on stock return, using Price-Earnings ratio (P/E) and stock fluctuation based on monthly time series pattern over the period 2006-2010.They described that the independent variables could influence on the research's dependent variable, which indicated that the impact of company's systematic risk and markets risk on companies' stock return were positive.Khodaei Valahzaghard and Salehi (2012) did another survey on the effect of the corporate governance characteristics and ownership on earnings quality in Iranian banking sector.
Sohrabi Araghi and Attari (2013) studied the impact of accruals and operating cash flows on users' decisions on financial statements for a case study of firms listed in Tehran Stock Exchange.They performed an investigation on the effect of accruals and operating cash flows in decisions of financial statement users for some companies whose shares were traded on Tehran stock exchange.They suggested that there was a different between accruals and operating cash flows data content in terms of various decision-making criteria.Nelson (2005) performed an empirical investigation on corporate governance practices, CEO characteristics and firm performance.Panahian et al. (2008) investigated the relationship between discretionary accruals quality as well as innate accruals quality and portion of non-executive board of directors, concentration of ownership ratio and board size in Tehran Stock Exchange.They reported that an increase on non-executive members positively could impact on discretionary accruals quality and negatively influenced innate accruals quality.They also explained that concentration of ownership ratio positively impacted on discretionary accruals quality and negatively influenced on innate accruals quality.Based on their survey, size of board of directors negatively impacted discretionary accruals quality and positively impacted on innate accruals quality.Ştefănescu (2011) investigated the level of disclosure ensured by corporate governance codes in force in European Union member states and explained that common law regime could ensure the biggest level of transparency through corporate governance requirements.

The proposed study
This investigation is classified as descriptive, gauging since it seeks to solve problems, we can use the results practically, and it is counted as a functional investigation.Statistical society in this survey includes direct reference to expert investors, with regard to expertise indexes, in stock exchange.Regarding to undetermined investors in under evaluation society and lack of accessibility (for resources limitation), a sample of 30 people was selected.Standard levels were selected for each index in this method, at least M.A. education, at least 5 years' experience in stock exchange, at least 100 transactions in stock exchange and people who were available for consecutive study and four periods questionnaire distributions.The option score in each index must not be lower than the standard level for acceptance.The researcher ' questionnaire is the used tool in this survey.At the first stage of questionnaire, Likert scale factoring analysis has been used for determining investors' problems.Second, the effective factors of investors' problems creation and their effect coefficients in real and legal issues were determined by Likert scale factoring analysis.Third, pair comparisons were used and problem solving strategies prioritizing were practiced via Borda mathematical method in the second section of the third stage.

Survey findings after analysis data
Current survey findings include types of information as well as determination of investors' problems in stock exchange on real and legal sections are shown in Table 1.According to the results of Table 1, all 10 problems were effective as real issues and lack of derivative instruments in market, Inadequacy of capitalization consulting institutions and Existence of classified information in market were altogether effective as legal issues.Determination of effective factors in cause problems and their influence coefficients on legal sections are shown in Tables 2. Analytical hierarchy process (AHP) (Saaty, 1992) is one of the most popular multiple criteria decision making problems.The proposed model of this paper uses AHP to rank different alternatives.
We have considered different criteria including Modeling, Preferential, Judgment and we have calculated relative weights and calculated the consistency ratio.Table 3 shows the comparison among various decision options accomplish base on pair comparison among indexes.The results of Table 3 reveal that consistency ratio is within an acceptable limit of 0.1, which means we can rely on our findings.The results indicate that Shortage in providing transparent information in some firms is the most important factor, followed by Lack of suitable analyzer in market, Lack of professionals for capitalization consulting, Violation of stockholders' rights except in case of main stockholders.In addition, Lack of stock holding culture among common people, Lack of efficient educational places in fundamental analysis level and Lack of professional dealers in market are in the lower priorities.Table 5 shows details of the implementation of our AHP method for ranking various items associated with legal issues.Based on the results of the Table 4 and Table 5, we can summarize the following strategies for possible actions to reduce investors' problems summarized in Table 6.Borda is a well-known mathematical method for group decision making in evaluation and selection indexes in real-world problems and the proposed model of this paper uses this mathematical model for ranking barriers.Ranking effective strategies to decrease real and legal problems using Borda approach (Hamidi et al., 2012) in real section are demonstrated in Eqs.
(1-4) as follows, 18 18 . . 1 1 (Borda Model) max( ) .The proposed Borda model presented from Eq. (1) to Eq. ( 4) is a mixed integer programming, which could be solved for real and legal parts, separately.Table 7 demonstrates details of our findings.As we can observe from the results of Table 7, in terms of real issues, Increase in quality of firms Financial Statement is number one priority followed by Increase stock exchange and agents' proficiency and electronic equipment, Unchangeable investment market rules and bounding organization managers to flow them and Strict supervision on agents' activities.In terms of legal issues, good supervision of provisions to force firms to reveal information correctly and restrict their secret bargaining is the most important factor followed by Using indirect investment guideline instead of direct investment, Increase in quality of firms' Financial Statement and Investors' training toward their rights.

Conclusion
In this paper, we have performed an empirical investigation to find important issues as barriers for investment in Tehran Stock Exchange.The study has categorized the issues into two groups of realworld and legal issues.Since there are different issues involved as major barriers, the study has implemented AHP to prioritize them.We have also extracted 18 important factors, which could influence investors' participation in Tehran Stock Exchange and using Borda method, we have prioritized them.The results of our survey have concluded that in terms of real issues, Increase in quality of firms Financial Statement is number one priority followed by Increase stock exchange and agents' proficiency and electronic equipment, Unchangeable investment market rules and bounding organization managers to flow them and Strict supervision on agents' activities.In terms of legal issues, good supervision of provisions to force firms to reveal information correctly and restrict their secret bargaining is the most important factor followed by Using indirect investment guideline instead of direct investment, Increase in quality of firms' Financial Statement and Investors' training toward their rights.

Table 2
Determination of effective factors in cause problems in legal section *Effectiveness degree from 100, ** N=30

Table 3
Preferential Matrix for each problem weights in real section *Analysis by AHP approach, CI=0.01165,CR=0.0088

Table 4
Determination of effective factors in cause problems in real section *Effectiveness degree from 100, ** N=30

Table 5
The results of prioritizing legal issues

Table 6
Suggested strategies for decreasing stock exchange investors' problems

Table 7
Selection Ranking Possible Strategy in real and legal section