The Use of Fuzzy Logic and Expert Systems for Rating and Pricing Firms: A New Perspective on Valuation

Managerial Finance, Vol. 33, No. 11, pp. 836-852, 2007

19 Pages Posted: 7 Feb 2020

See all articles by Stefano Malagoli

Stefano Malagoli

Università degli studi di Modena e Reggio Emilia (UNIMORE)

Carlo Alberto Magni

Università degli studi di Modena e Reggio Emilia (UNIMORE) - School of Doctorate E4E (Engineering for Economics-Economics for Engineering)

Giovanni Mastroleo

Università degli Studi della Calabria

Date Written: May 10, 2005

Abstract

This paper presents an expert system aimed at evaluating firms and business units. It makes us 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.

Keywords: Firm valuation, fuzzy logic, expert system, acquisition, rating, pricing

JEL Classification: G34, G31, C88, M20

Suggested Citation

Malagoli, Stefano and Magni, Carlo Alberto and Mastroleo, Giovanni, The Use of Fuzzy Logic and Expert Systems for Rating and Pricing Firms: A New Perspective on Valuation (May 10, 2005). Managerial Finance, Vol. 33, No. 11, pp. 836-852, 2007. Available at SSRN: https://ssrn.com/abstract=1311915

Stefano Malagoli

Università degli studi di Modena e Reggio Emilia (UNIMORE) ( email )

Viale A. Allegri 9
Modena 42121

Carlo Alberto Magni (Contact Author)

Università degli studi di Modena e Reggio Emilia (UNIMORE) - School of Doctorate E4E (Engineering for Economics-Economics for Engineering) ( email )

Italy

Giovanni Mastroleo

Università degli Studi della Calabria ( email )

Italy

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