Evaluating multi-criteria ratings of financial investment options

Abstract

In the financial market, most available rating information is based on multi-criteria and published by myriad agents or companies. Given a multi-criteria rating report on a finite number of assets (e.g., stocks, bonds, mutual funds), we can construct sets of ordered classes. If ratings from a published report have useful and valid information value as claimed, the average performances of assets within classes are expected to show some monotonic property. A set of hypotheses and empirical tests based on Value Line Mutual Fund Survey are provided to illustrate our proposed method. Implications and future research opportunities are also discussed. (C) 2013 Published by Elsevier Inc.