• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.7763/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing: Engineering & Technology Digital Library, ProQuest, Crossref, Electronic Journals Library, DOAJ and Ulrich's Periodicals Directory
    • E-mail: ijtef@vip.163.com
IJTEF 2010 Vol.1(3): 277-282 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2010.V1.50

A Hybrid Value Investing Method for the Evaluation of Banking Stocks

Shen Kao-Yi and Yan Min-Ren
Abstract—Stock market is regarded as a highly dynamic and complex environment consisting of opportunities and risks. All participants want to earn profits by adopting their investment strategies. One of the most famous investment strategies is value investing, which attracts both practitioners and researchers’ attention all over the world. Empirical studies have consistently found that value stocks outperform the market in the long run, but it often encounters obstacles to implement this strategy in practices. Due to the need of in-depth analysis of financial statements, investors not only need accounting knowledge but also investment expertise. Among previous studies, the accounting-based fundamental analysis (F-score) has been a widely accepted model for value investing. The F-score model proposed nine fundamental signals to measure a firm’s financial prospect. However, it is difficult to acquire the implicit knowledge and interactive considerations of senior experts. Thus, the evaluation processes of investment experts cannot be revealed for the others’ reference. To improve the limitations, this paper integrates fuzzy set theory and decision methods to propose an innovative model for distinguishing strong financial prospect stocks within high book-to-market (B/M) banking stocks. Our empirical study shows the practicability of our proposed method. It also provides the relative weights and the interdependence of each measurement variables for the value investing strategy.

Index Terms—investing style, F-score, fuzzy, ANP.

First Auther, Shen Kao-Yi is with the Department of Finance, Chinese Culture University (SCE); 231, Sec.2, Chien-Kuo S. Road., Taipei, Taiwan (corresponding author’s phone number: 886-2-2700-5858 ext.8676; fax: 886-2-27075312; e-mail: kyshen@sce.pccu.edu.tw).
Second Author, Yan Min-Ren is with the Department of International Business Administration, Chinese Culture University (SCE), Taipei, Taiwan (e-mail: mjyen@sce.pccu.edu.tw).

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Cite:Shen Kao-Yi and Yan Min-Ren, "A Hybrid Value Investing Method for the Evaluation of Banking Stocks," International Journal of Trade, Economics and Finance vol.1, no.3, pp. 277-282, 2010.

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