Research

A Risk Scoring Model and Application to Measuring Internet Stock Performance

This paper proposes a risk scoring model to assess the performance of 27 US companies listed online by applying Data Envelopment Analysis (DEA) and comparing with the traditional financial measure Return on Equity (ROE). The DEA evaluation process involves two processes: (1) computation of operating efficiency and effectiveness to measure a company's operating performance, and (2) measurement of the return level per unit of risk to provide guidance for their investors. The risk scoring model is useful for both investors and company managers. For investors, it yields a new stock selecting strategy. For managers, it provides a risk-adjusted performance evaluation process. Empirical results show that for the Internet industry, the effectiveness of a company is more important than operating efficiency. Investors investing in efficient online companies yield higher returns.

Publication Information
Article Title: A Risk Scoring Model and Application to Measuring Internet Stock Performance
Journal: International Journal of Information Technology and Decision Making (2009)
8:1, 2009, 133-149
Author(s): C. T. , Ho;  D. , Wu;  C. , Chou;  Olson, David L
Researcher Information
    
Olson, David L
Olson, David L
James and H.K. Stuart Chancellors Distinguished Chair
Expertise:
  • Systems Simulation and Analysis
  • Strategic Management
  • Information Systems
  • Business Analytics
  • Decision Making
Supply Chain Management and Analytics
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dolson3@unl.edu