Financial performance drivers in BRICS healthcare companies: Locally estimated scatterplot smoothing partial utility functions

Tipo
Artigos

Ano
11/04/2022

Linha de Pesquisa
Administração e Economia de Negócios

Autor(es)
Peter Wanke, Md. Abul Kalam Azad,Yong Tan, Roberto Pimenta

Orientador

https://doi.org/10.1002/mcda.1761


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Journal of Multi-Criteria Decision Analysis, v. 29, n. 1/2, pp. 173-185. Abstract: The Healthcare sector is increasing in importance and relative size in BRICS countries (Brazil, Russia, India, China, South Africa). Despite BRICS relevance, the financial performance of their healthcare companies has been scarcely studied. This research fills this literature gap not only by focusing on the impacts of such diverse business environments on the financial performance of healthcare providers but also by proposing a novel approach to estimate an overall financial performance index based on weighted additive utility functions given a set of financial performance criteria. Precisely, bootstrapped Singular Value Decomposition is the cornerstone for identifying an orthogonal base of rotated financial performance criteria, upon which partial utility functions (PUFs) are estimated using locally estimated scatterplot smoothing (LOESS) polynomial regression. A compromise weighting scheme between singular values and quadratic programming results for minimal covariance and joint entropy matrices of residuals was used for summing up the PUFs. Results indicate that the values of financial performance range between 0.7 and 0.85. We further find that current assets, level of debt and liability, the company’s Tobin Q are related to the financial performance. Besides, business freedom, government integrity, tax burden, monetary freedom and government spending are also the determinants of financial performance.

Keywords: Financial health index, LOESS estimation, Multiple criteria analysis, SVD, Utility functions.

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