Application of decision tree and relative proximity to evaluation of sustainable development capacities of listed electric power companies

    Hao Mou Affiliation
    ; Xiaobo Tang Affiliation
    ; Hexuan Gao Affiliation
    ; Yalan Liu Affiliation


In a complex market environment with fierce competition, maintaining their current market positions is an important issue for electric power companies. Sustainable development not only requires them to pay attention to their current operating efficiencies but also to actively participate in environmental and social responsibilities to maintain their competitive advantages. This paper proposes a model for evaluating the sustainable development capacities of power companies. Firstly, the preliminary evaluation indicator system is constructed with the seven dimensions of production safety, public relations and social welfare, shareholder rights protection, environmental sustainability, employee rights protection, scientific research innovation ability, and financial status. Then, specific financial indicators are selected by CART to avoid indicator redundancies and the final evaluation indicator system is constructed. Finally, the relative proximity calculated by the TOPSIS method is applied to evaluate the sustainable development capacities. An empirical study of 18 listed electric power companies is conducted to verify the evaluation model. The results show that the performances of these companies in production safety and environmental sustainability are generally satisfactory, but the overall performances in public relations and social welfare, employee rights protection, and scientific research innovation ability are relatively poor, so these dimensions should be strengthened.

First published online 15 July 2022

Keyword : sustainable development, listed electric power companies, sustainability indicators, feature selection, CART decision tree, relative proximity

How to Cite
Mou, H., Tang, X., Gao, H., & Liu, Y. (2022). Application of decision tree and relative proximity to evaluation of sustainable development capacities of listed electric power companies. Journal of Business Economics and Management, 23(5), 1016–1036.
Published in Issue
Oct 7, 2022
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Aras, G., Tezcan, N., & Kutlu Furtuna, O. (2018). Multidimensional comprehensive corporate sustainability performance evaluation model: Evidence from an emerging market banking sector. Journal of Cleaner Production, 185, 600–609.

Brammer, S., & Millington, A. (2005). Corporate reputation and philanthropy: An empirical analysis. Journal of Business Ethics, 61(1), 29–44.

Brown, P., Beekes, W., & Verhoeven, P. (2011). Corporate governance, accounting and finance: A review. Accounting & Finance, 51(1), 96–172.

Buchholz, H., Eberle, T., Klevesath, M., Jürgens, A., Beal, D., Baic, A., & Radeke, J. (2020). Forward thinking for sustainable business value: A new method for impact valuation. Sustainability, 12(20), 8420.

Bunget, O.-C., Mateș, D., Dumitrescu, A.-C., Bogdan, O., & Burcă, V. (2020). The link between board structure, audit, and performance for corporate sustainability. Sustainability, 12(20), 8408.

Casarejos, F., Frota, M., Rocha, J., da Silva, W., & Barreto, J. (2016). Corporate sustainability strategies: a case study in Brazil focused on high consumers of electricity. Sustainability, 8(8), 791.

Ciabattoni, L., Cimini, G., Ferracuti, F., Grisostomi, M., Ippoliti, G., & Pirro, M. (2015, November). Bayes error based feature selection: An electric motors fault detection case study. In IECON 2015 – 41st Annual Conference of the IEEE Industrial Electronics Society (pp. 003893–003898). IEEE.

Dočekalová, M. P., & Kocmanová, A. (2016). Composite indicator for measuring corporate sustainability. Ecological Indicators, 61, 612–623.

Engida, T. G., Rao, X., Berentsen, P. B. M., & Oude Lansink, A. G. J. M. (2018). Measuring corporate sustainability performance – the case of European food and beverage companies. Journal of Cleaner Production, 195, 734–743.

Feltham, G. A., & Ohlson, J. A. (1995). Valuation and clean surplus accounting for operating and financial activities. Contemporary accounting research, 11(2), 689–731.

Hategan, C. D., & Curea-Pitorac, R. I. (2017). Testing the correlations between corporate giving, performance and company value. Sustainability, 9(7), 1210.

Houqe, M. N., van Zijl, T., Karim, A. W., & St George, T. (2021). The value relevance of corporate donations. Pacific-Basin Finance Journal, 66, 101127.

Jiang, Q., Liu, Z., Liu, W., Li, T., Cong, W., Zhang, H., & Shi, J. (2018). A principal component analysis based three-dimensional sustainability assessment model to evaluate corporate sustainable performance. Journal of Cleaner Production, 187, 625–637.

Liu, M. (2014). Study on corporate environmental performance evaluation based on improved DEA. Proceedings of the 2nd International Conference on Education, Management and Social Science (ICEMSS 2014) ) (pp. 393–396). Atlantis Press.

Liu, Q. H., & Chen, J. (2017). Fuzzy comprehensive evaluation of intelligent electric grid and its application. Statistics and Decision Making, 3, 77–80.

Liu, X. N., Wei, J., Zhang, W. T., Ye, S. Y., Chen, B., & Liu, J. Y. (2019). Investment benefits evaluation and decision for distribution network based on information entropy and fuzzy analysis method. Power System Protection and Control, 47(12), 48–56.

Li, J., Li, X. H., Liu, S. Y., Zeng, M., Liu, H. Z., & Xu, W. X. (2012). Investment benefit evaluation for distribution network based on TOPSIS and grey correlation degree. East China Electric Power, 40(01), 13–17.

Li, Y. B., Yu, X. Y., & Wang, Z. J. (2013). Risk assessment on photovoltaic power generation project by grey correlation analysis and TOPSIS method. Power System Technology, 37(06), 1514–1519.

Mainali, B., & Silveira, S. (2015). Using a sustainability index to assess energy technologies for rural electrification. Renewable and Sustainable Energy Reviews, 41, 1351–1365.

Martínez‐Ferrero, J., & Frias‐Aceituno, J. V. (2015). Relationship between sustainable development and financial performance: International empirical research. Business Strategy and the Environment, 24(1), 20–39.

Niu, D., Li, S., & Dai, S. (2018). Comprehensive evaluation for operating efficiency of electricity retail companies based on the improved TOPSIS method and LSSVM optimized by modified ant colony algorithm from the view of sustainable development. Sustainability, 10(3), 860.

Peñalvo-López, E., Pérez-Navarro, Á., Hurtado, E., & Cárcel-Carrasco, F. J. (2019). Comprehensive methodology for sustainable power supply in emerging countries. Sustainability, 11(19), 5398.

Peng, H., Long, F., & Ding, C. (2005). Feature selection based on mutual information criteria of max-dependency, max-relevance, and min-redundancy. IEEE Transactions on Pattern Analysis and Machine Intelligence, 27(8), 1226–1238.

Popović, B., Janković Šoja, S., Paunović, T., & Maletić, R. (2019). Evaluation of sustainable development management in EU countries. Sustainability, 11(24), 7140.

Sarangi, G. K., Mishra, A., Chang, Y., & Taghizadeh-Hesary, F. (2019). Indian electricity sector, energy security and sustainability: An empirical assessment. Energy Policy, 135, 110964.

Saraswat, S. K., & Digalwar, A. K. (2021). Empirical investigation and validation of sustainability indicators for the assessment of energy sources in India. Renewable and Sustainable Energy Reviews, 145, 111156.

Smallman, C., & John, G. (2001). British directors perspectives on the impact of health and safety on corporate performance. Safety Science, 38(3), 227–239.

Srivastava, A. K., Singh, D., Pandey, A. S., & Maini, T. (2019). A novel feature selection and short-term price forecasting based on a decision tree (J48) model. Energies, 12(19), 3665.

Staniškienė, E., & Stankevičiūtė, Ž. (2018). Social sustainability measurement framework: The case of employee perspective in a CSR-committed organisation. Journal of Cleaner Production, 188, 708–719.

Tseng, M.-L., Wu, K.-J., Ma, L., Kuo, T. C., & Sai, F. (2019). A hierarchical framework for assessing corporate sustainability performance using a hybrid fuzzy synthetic method-DEMATEL. Technological Forecasting & Social Change, 144, 524–533.

Wang, Y., Yang, J., Zhou, M., Zhang, D., Song, F., Dong, F., Zhu, J., & Liu, L. (2021). Evaluating the sustainability of China’s power generation industry based on a matter-element extension model. Utilities Policy, 69, 101166.

Wang, Z. J., Liu, S. S., Xue, S., & Zeng, M. (2014). Evaluation model for demand-side response resource value based on entropy and TOPSIS. East China Electric Power, 42(01), 143–149.

Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.

Xiao, S. F., Shi, Q., & Zhang, Y. M. (2020). The construction of listed companies innovation capability index. Journal of Beijing Institute of Technology (Social Sciences Edition), 22(01), 57–69.

Yao, X., Wang, X., Zhang, Y., & Quan, W. (2012). Summary of feature selection algorithms. Control and Decision Making, 27(02), 161–166+192.

Zhang, E., Li, J., Yu, H., Lin, H., & Chen, G. (2017, October). Correlation analysis between stock prices and four financial indexes for some listed companies of mainland China. In 2017 10th International Congress on Image and Signal Processing, BioMedical Engineering and Informatics (CISP-BMEI) (pp. 1–5). IEEE.