| Summary: | Grey Relational Analysis (GRA) is one of the most active branches of Grey System Theory that has been widely applied to select the best alternative among a set of options based on multiple criteria. In GRA, the alternatives can be ranked according to their Grey Relational Grade (GRG) and it allows for customization through a flexible parameter known as Distinguishing Coefficient (ζ). Although the value of ζ can be adjusted by the decision maker's judgement, however previous studies often assumed a default value of 0.5. Hence, the main objective of this study is to analyze the effect of the variation in ζ on the ranking of ten Shariah-compliance companies in Malaysia. Next, the results obtained were compared with Technique for Order Preference for Similarity to an Ideal Solution (TOPSIS) to confirm the validity of the GRA approach. The analysis was employed using selected categories in financial ratios: investment, profitability, liquidity, leverage and efficiency from 2017 until 2021. The empirical result shows that the GRG values increased in parallel with ζ and proved that the variation in ζ has minimal impact on the overall GRA result. Additionally, the ranking obtained by GRA and TOPSIS also have shown consistency, especially for the top two companies which are NESTLE and PETGAS and the bottom three companies, MISC, PMETAL and AXIATA. Therefore, the results show that GRA can be effectively applied in ranking the best Shariah-compliant companies in the context of the local market. © 2024 Author(s).
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