VALUE CREATION FOR THE SHAREHOLDER FROM THE PERSPECTIVE OF FUZZY COGNITIVE MAPS (FCM)

M.P. Rodríguez, K. Cortez and Dora Luz Ramirez
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K. Cortez: Universidad Autónoma de Nuevo León

Fuzzy Economic Review, 2009, vol. XIV, issue 2, 17-34

Abstract: In this contemporary business world, our administrators are frequently faced with an environment of high complexity which makes necessary the use of various methods to measure the performance of the different companies in the reality. Generally speaking, the value creation models used in finance, all frequently explain by models of econometric estimations based on accounting variables, such as; ROE (return on Equity) and ROA (Return of Assets); market variables such as; the price of shares, and a mixture of both (Accounting and Market), such as; EVA® (Economic Value Added) and PER (Price Earning Ratio). These models tend to emphases only the advantages of their application and overlook its weaknesses. Companies generally have a variety of objectives they must accomplish, among which; value creation for shareholders is among the most important. The common financial method used in the past to measure value creation for shareholders have resulted to some extent inadequate. Therefore, we take this opportunity to analyze the methodology known, as Fuzzy Cognitive Maps (FCM) however, with an alternative method of calculating the weights based on the analysis of documents. Furthermore, this tool allows to include qualitative and quantitative data, which facilitates and accentuates its application in the current business world. It is important to mention that FCM's can be constructed through the use of an Artificial Neural Network or through expert opinions, however, these are options that are not usually feasible due to their operative nature. Consequently, we propose the use of FCM based on the analysis of documents channelled through the accumulation of phrases as an alternative method.

Keywords: artificial neural network; experts methods; fuzzy cognitive maps; value creation (search for similar items in EconPapers)
Date: 2009
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