The use of fuzzy logic and expert systems for rating and pricing firms: a new perspective on valuation.

Malagoli, Stefano; Mastroleo, Giovanni and Magni, Carlo Alberto (2005): The use of fuzzy logic and expert systems for rating and pricing firms: a new perspective on valuation. Published in: Managerial Finance , Vol. 33, No. 11 (2007): pp. 836-852.

Abstract

This paper presents an expert system aimed at evaluating firms and business units. It makes use of fuzzy logic and integrates financial, strategic, managerial aspects, processing both quantitative and qualitative information. Twenty-nine value drivers are explicitly taken into account and combined together via “if-then” rules to produce an output. The output is a real number in the interval [0,1], representing the value-creation power of the firm. The system may be used for rating, ranking and pricing firms as well as for assessing the impact of managers’ decisions on value creation and as a tool of corporate governance.

• Item Type: MPRA Paper
• Language: English
• Keywords: Firm valuation, fuzzy logic, expert system, acquisition, rating, pricing
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting; Fixed Investment and Inventory Studies; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology; Computer Programs > C88 - Other Computer Software; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance; M - Business Administration and Business Economics; Marketing; Accounting > M2 - Business Economics > M21 - Business Economics

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