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DOI 10.1007/s10489-010-0259-7
might be two main results based on the clustering analysis: network. Findings on the GRA model prediction indicated
the first cluster contains two groups in which both finan- that GRA performance was superior to those from the other
cial stability and activity of the enterprise is good and bad three models. And Wang [9] applied the Gas to enhance the
at the same time, and the second cluster also contains two GM (1.1) model within the Grey system, in addition, he also
groups in which at least one factor, between financial stabil- applied Taiwan IC industry as one of the empirical case stud-
ity and activity, is good and the other one is bad. Finally, in ies. Moreover, GAGM was found to have the capability of
this article, grey relational analysis and cluster analysis re- generating less forecasting errors than that of BGM (1, 1)
sults are aimed respectively at, financial index is associated model. If the readers are interested, they can refer to the
as sample data, and we referring to Dain [1] using genetic publications by professor Deng or the publications of other
programming to construct mobile robot navigation strate- scholars to have a detailed understanding of the theoretical
gies, Wu and Tsai [2] using neural networks to classifica- basis of grey relational analysis.
tion spam filtering and Jang et al. [3] using neural networks In this article, grey relational analysis is used to study in
to predict stock price trend. Genetic Programming (GP), detail, the business operation and management performance
Back-Propagation Neural Network (BPN) and Logistic Re- of enterprises in Mainland China, where in the same time, it
gression (LR) are adopted to construct Enterprise Operation is used for ranking. Dichotomy is used to properly split/rank
Performance (EOP) and Enterprise Finance Characteristics enterprises into good and bad firms, regarding their opera-
(EFC). It is hoped that the research result can be used as a tion performance.
business operational and management reference by the en-
terprises. 2.2 Kmedoid cluster
This study is structured as follows. In Sect. 1 some in-
troductory comments, as well as the main objective of this Kmedoid, as compared to Kmeans, is a rather new hard
paper, are presented. In Sect. 2 some methodological issues clustering method. The main difference between Kmeans
regarding the grey relational analysis, the cluster model and and Kmedoid stands in calculating the cluster centers. The
genetic programming, are analyzed. In the next section, re- new cluster center is the nearest data point to the mean of
sults from the empirical analysis are provided. Finally, in the cluster points. The hard partitioning methods are simple
Sect. 4 some basic concluding remarks and suggestions for and popular, though their results are not always reliable and
further research directions are discussed. these algorithms have numerical problems as well. From an
N × n dimensional data set, Kmedoid algorithms allocate
each data point to one of c clusters to minimize the within-
2 Research method cluster sum of squares:
c
2.1 Grey relational analysis xk − vi 2
i=1 k∈Ai
Grey theory has been developed by professor Deng [4] of
Mainland China for over 20 years. This theory mainly aims where Ai is a set of objects (data points) in the i-th cluster
at performing system relational analysis and model con- and vi is the mean for the points over cluster “i” denotes
struction, in the case of incomplete information and unclear actually a distance norm. In Kmeans clustering vi called the
system model. Grey Relational Analysis is a part of grey the- cluster prototypes, i.e. the cluster centers:
ory, and it is a factor analysis method [5]. It is mainly used to Ni
k=1 xk
analyze the relational grade between divergent events. How- vi = , xk ∈ Ai
ever, grade of grey relation means the change of relational Ni
grade along with time for two factors of two systems or where Ni is the number of objects in Ai .
one system. If the relation is close, then the two systems, In Kmedoid clustering the cluster centers are the nearest
or the change of factor, approach a consistent value. Oth- objects to the mean of data in one cluster V = {vi ∈ X|l 1 ≤
erwise, the system is not consistent. However, at this time, i ≤ c}. It is useful when each data point denotes a position
grey relational analysis has been widely applied to the as- of a system, so there is no continuity in the data space. In
sessment of business operational performance [6, 7]. Addi- these ways, the mean of the points in one set does not exist.
tionally, the researches of problem predictions through Grey
system theory and applications include Huang [8]. Proce- 2.3 GK cluster
dure presented for formal software estimation by applying
the integration from GRA with GA, in conjunction to ac- In this article, we referring to Bahrampour et al. [10] using
curacy comparison through approaches of case-by-case rea- Gustafson-Kessel [11] clustering algorithm (GK cluster) ex-
soning, classification, regression tree and artificial neural tends the Fuzzy C-means (FCM) algorithm by employing an
The use of genetic programming for the construction of a financial management model in an enterprise
adaptive distance norm in order to detect clusters with dif- Fig. 1 The syntax tree of
genetic programming
ferent geometrical shapes in the data set. GK Cluster algo-
rithm acquires membership function matrix U and cluster-
ing center V through the acquisition of objective function.
The efficiency index of GK Cluster algorithm is:
c
N
J (Z, V , U ) = (μij )m zj − υi 2A
i=1 j =1
2.4 Genetic programming and GPLAB In this study, data regarding financial ratios of enterprises
in Mainland China for the year 2008 were collected from
Genetic Programming (GP) is a recent data mining tech- the China Economic Research Database, there are 736 en-
nique developed by professor Koza [12, 13] and is based on terprises in all. Also, enterprises with defective data were
the genetic algorithm of Holland [14]. Genetic programming excluded and fetch the integer. So, the final dataset com-
shares some concepts from genetic algorithms, such as the prised of 600 firms. In order to analyze stability and activity
chromosome, fitness function, reproduction, crossover and of these enterprises, Specific financial ratios were properly
mutation. However, what is different is, genetic program- chosen, based on the stability and activity of the financial
ming further replaces genes within chromosomes (0 and 1) five forces for selection. The main objective is to analyze
by syntax tree. Therefore, each individual within the popula- the performance of each enterprise in stability and activ-
tion represents a set of computer programs. These program
ity. The selected ratios are the current ratio (X1), debt ra-
codes, similar to genes and through the natural selection in
tio (X2), inventory turnover ratio (X3), Accounts receivable
the evolution process, can generate optimal program codes.
turnover rate (X4) and asset turnover rate (X5). Its formula
Another difference between genetic algorithm and genetic
is:
programming is that the latter uses tree structures with high
variations in size, shape and structure to represent chromo- current ratio (X1) = current assets/current liabilities
somes, and it represents different formulas respectively. This debt ratio (X2) = total liabilities/total assets
is shown in Fig. 1. inventory turnover ratio (X3) = sales/inventories
W.-T. Pan
accounts receivable turnover rate (X4) = net sales/average with good operation and management performance and the
accounts receivable other 300 companies with bad operation and management
asset turnover rate (X5) = net sales/total assets. performance. The grey relational analysis result is as shown
in Fig. 2. In this article, the minimal value of debt ratio (X2)
The descriptive statistical values of these ratio data are as
and the maximal value of other indexes (X1, X3, X4, X5) are
shown in Table 1.
used as standard sequence. Here, bold-dotted lines represent
3.2 Enterprise’s operational and management performance Standard Sequence, and the rest of the fine lines represent
analysis Inspected Sequence, that is, the rest of the data. Each data
has five nodes representing five space indexes of that enter-
In this article, all variables are considered as assessment in- prise. The closer Inspected Sequence gets to Standard Se-
dexes for the enterprise’s operational and management per- quence, the better the business operational and management
formance so as to apply grey relational analysis and to in- performance of that enterprise.
vestigate the business operation and management perfor- It is found that enterprises with the top three rank-
mance of enterprises in Mainland China in 2008. All the ings in business operational and management performance
index values, except debt ratio, will be the larger the bet- are: Fujian Expressway (600033), Hongsheng Technology
ter. For all the assessment indexes, grey relational analysis Co., Ltd. (600817) and Orient International Enterprise, Ltd.
as proposed by professor Deng is used. The grey relational (600278), respectively. And the last three rankings are:
Matlab toolbox developed by Wen et al. [15] is adopted to Beisheng Pharmaceutical (600556), Jintai Group Co., Ltd.
find out the Grey Relational Grade and to perform ranking. (600385) and Tianyi Science & Technology (600703), re-
In this article, dichotomy is used in order to properly sepa- spectively. Next, these results are used to construct Enter-
rate the 600 enterprises into two categories: 300 companies prise Operation Performance (EOP) to be used as reference
for business operational and management performance by
Table 1 The descriptive statistical values of financial ratios of 600 other enterprises. In order to assess whether there is any
enterprises in Mainland China problem regarding the business operation and management
of any enterprise, the corresponding performance indexes of
X1 X2 X3 X4 X5
this enterprise have to be inserted into the model. In this ar-
Max 22.447 11.468 295.159 21.436 3.025
ticle, the former 300 enterprises represent enterprises with
good business operational and management performance
Min 0.023 0.001 0.014 0.042 0.001
(represented by 0), and the latter 300 enterprises represent
Avg 1.383 1.418 7.884 7.659 0.669
enterprises with bad business operational and management
Std 1.611 1.266 23.301 4.826 0.459
performance (represented by 1). Then, this is considered as a
N 600 600 600 600 600
dependent variable and is associated with five space indexes
In this article, Back-Propagation Neural Network is In this article, all the assessment indexes for the enterprise’s
adopted again to construct Enterprise Operational Perfor- operational and management performance are used again to
mance model. In the architecture selection of neural net- perform the financial characteristic analysis of enterprises.
work, this article has referred to the publication of Yeh [16]. Among the financial five forces, stability represents the en-
For general issues, one hidden layer can be adopted for the terprise’s short term liquidity and level of debt, activity
W.-T. Pan
Xie and Beni’s Index (XBI) is the sum of the ratio of the
close status of each group to the group center to the minimal
close status of each group to the group center, and for this
value, the smaller the better. Its formula is:
c N
j =1 (μij ) xj − vi 2
m
i=1
XBI =
N mini,j xj − vi 2
EFC
Recall 0.9911 0.9644 0.9703 0.9852 0.9703 0.9318 0.9733
Precision 0.9056 0.8783 0.8828 0.8956 0.8850 0.8587 0.8895
F Value 0.9464 0.9193 0.9245 0.9382 0.9257 0.8937 0.9295
EOP
Recall 0.9867 0.9367 0.9367 0.9833 0.9300 0.9433 0.9733
Precision 0.9834 0.8949 0.9243 0.9736 0.9426 0.9042 0.9669
F Value 0.9850 0.9153 0.9305 0.9784 0.9362 0.9233 0.9701
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0219-2. Available online 13 March 2010
to apply grey relational analysis in order to investigate the
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