The use of fuzzy logic and expert systems for rating and pricing firms: A new perspective on valuation
Purpose -The purpose of the paper is to focus on the rating, ranking and valuing of firms. Design/methodology/approach -Fuzzy logic and expert systems are used in order to provide a score for the firm(s) under consideration, representing the firm value-creating power. Findings -The fuzzy expert system introduced is capable of dealing with both quantitative and qualitative variables and integrates financial, managerial and strategic variables. A sensitivity analysis corroborates the model. Research limitations/implications - The system is apt to rate and rank firms within a sector. Some regression analysis can lead to a determined price for the target firm. Practical implications - The expert system may be used by rating agencies for ranking firms, and by financial analysts and potential buyers to furnish a price for acquisition. Originality/Value -The use of a fuzzy expert system for ranking firms within a sector and pricing firms is a first attempt at an alternative way of measuring performance and value.
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Volume (Year): 33 (2007)
Issue (Month): 11 ()
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References listed on IDEAS
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- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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- Carlo Alberto Magni, 2009.
"A fuzzy expert system for solving real-option decision processes,"
PROYECCIONES FINANCIERAS Y VALORACION
005677, MASTER CONSULTORES.
- Magni, C. A. & Mastroleo G. & Facchinetti, G., 2001. "A Fuzzy expert system for solving ReaL-Option decision processes," Fuzzy Economic Review, International Association for Fuzzy-set Management and Economy (SIGEF), vol. 0(2), pages 51-73, November.
- Carlo Alberto Magni & Giovanni Mastroleo & Marina Vignola & Gisella Facchinetti, 2009. "Strategic options and expert systems: a fruitful marriage," PROYECCIONES FINANCIERAS Y VALORACION 006122, MASTER CONSULTORES.
- Richard S Ruback, 2002. "Capital Cash Flows: A Simple Approach to Valuing Risky Cash Flows," Financial Management, Financial Management Association, vol. 31(2), Summer.
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