Intangibles mismeasurements, synergy, and accounting numbers : a note.

For the last two decades, authors (e.g. Ohlson, 1995; Lev, 2000, 2001) have regularly pointed out the enforcement of limitations by traditional accounting frameworks on financial reporting informativeness. Consistent with this claim, it has been then argued that accounting finds one of its major limits in not allowing for direct recognition of synergy occurring amongst the firm intangible and tangible items (Casta, 1994; Casta & Lesage, 2001). Although the firm synergy phenomenon has been widely documented in the recent accounting literature (see for instance, Hand & Lev, 2004; Lev, 2001) research hitherto has failed to provide a clear approach to assess directly and account for such a henceforth fundamental corporate factor. The objective of this paper is to raise and examine, but not address exhaustively, the specific issues induced by modelling the synergy occurring amongst the firm assets whilst pointing out the limits of traditional accounting valuation tools. Since financial accounting valuation methods are mostly based on the mathematical property of additivity, and consequently may occult the perspective of regarding the firm as an organized set of assets, we propose an alternative valuation approach based on non-additive measures issued from the Choquet's (1953) and Sugeno's (1997) framework. More precisely, we show how this integration technique with respect to a non-additive measure can be used to cope with either positive or negative synergy in a firm value-building process and then discuss its potential future implications for financial reporting.Financial reporting; accounting goodwill; assets synergy; non-additive measures; Choquet’s framework;

Water Supply Planning under Interdependence of Actions: Theory and Application

An ongoing water supply planning problem in the Regional Municipality of Waterloo, Ontario, Canada, is studied to select the best water supply combination, within a multiple-objective framework, when actions are interdependent. The interdependencies in the problem are described and shown to be essential features. The problem is formulated as a multiple-criteria integer program with interdependent actions. Because of the large number of potential actions and the nonconvexity of the decision space, it is quite difficult to find nondominated subsets of actions. Instead, a modified goal programming technique is suggested to identify promising subsets. The appropriateness of this technique is explained, and the lessons learned in applying it to the Waterloo water supply planning problem are described

Robust ordinal regression for value functions handling interacting criteria

International audienceWe present a new method called UTAGMS–INT for ranking a finite set of alternatives evaluated on multiple criteria. It belongs to the family of Robust Ordinal Regression (ROR) methods which build a set of preference models compatible with preference information elicited by the Decision Maker (DM). The preference model used by UTAGMS–INT is a general additive value function augmented by two types of components corresponding to ‘‘bonus’’ or ‘‘penalty’’ values for positively or negatively interacting pairs of criteria, respectively. When calculating value of a particular alternative, a bonus is added to the additive component of the value function if a given pair of criteria is in a positive synergy for performances of this alternative on the two criteria. Similarly, a penalty is subtracted from the additive component of the value function if a given pair of criteria is in a negative synergy for performances of the considered alternative on the two criteria. The preference information elicited by the DM is composed of pairwise comparisons of some reference alternatives, as well as of comparisons of some pairs of reference alternatives with respect to intensity of preference, either comprehensively or on a particular criterion. In UTAGMS–INT, ROR starts with identification of pairs of interacting criteria for given preference information by solving a mixed-integer linear program. Once the interacting pairs are validated by the DM, ROR continues calculations with the whole set of compatible value functions handling the interacting criteria, to get necessary and possible preference relations in the considered set of alternatives. A single representative value function can be calculated to attribute specific scores to alternatives. It also gives values to bonuses and penalties. UTAGMS–INT handles quite general interactions among criteria and provides an interesting alternative to the Choquet integral

A Fuzzy-based Framework to Support Multicriteria Design of Mechatronic Systems

Designing a mechatronic system is a complex task since it deals with a high number of system components with multi-disciplinary nature in the presence of interacting design objectives. Currently, the sequential design is widely used by designers in industries that deal with different domains and their corresponding design objectives separately leading to a functional but not necessarily an optimal result. Consequently, the need for a systematic and multi-objective design methodology arises. A new conceptual design approach based on a multi-criteria profile for mechatronic systems has been previously presented by the authors which uses a series of nonlinear fuzzy-based aggregation functions to facilitate decision-making for design evaluation in the presence of interacting criteria. Choquet fuzzy integrals are one of the most expressive and reliable preference models used in decision theory for multicriteria decision making. They perform a weighted aggregation by the means of fuzzy measures assigning a weight to any coalition of criteria. This enables the designers to model importance and also interactions among criteria thus covering an important range of possible decision outcomes. However, specification of the fuzzy measures involves many parameters and is very difficult when only relying on the designer's intuition. In this paper, we discuss three different methods of fuzzy measure identification tailored for a mechatronic design process and exemplified by a case study of designing a vision-guided quadrotor drone. The results obtained from each method are discussed in the end

Participatory Modelling and Decision Support for Natural Resources Management in Climate Change Research

The ever greater role given to public participation by laws and regulations, in particular in the field of environmental management calls for new operational methods and tools for managers and practitioners. This paper analyses the potentials and the critical limitations of current approaches in the fields of simulation modelling (SM), public participation (PP) and decision analysis (DA), for natural resources management within the context of climate change research. The potential synergies of combining SM, PP and DA into an integrated methodological framework are identified and a methodological proposal is presented, called NetSyMoD (Network Analysis – Creative System Modelling – Decision Support), which aims at facilitating the involvement of stakeholders or experts in policy - or decision-making processes (P/DMP). A generic P/DMP is formalised in NetSyMoD as a sequence of six main phases: (i) Actors analysis; (ii) Problem analysis; (iii) Creative System Modelling; (iv) DSS design; (v) Analysis of Options; and (vi) Action taking and monitoring. Several variants of the NetSyMoD approach have been adapted to different contexts such as integrated water resources management and coastal management, and, recently it has been applied in climate change research projects. Experience has shown that NetSyMoD may be a useful framework for skilled professionals, for guiding the P/DMP, and providing practical solutions to problems encountered in the different phases of the decision/policy making process, in particular when future scenarios or projections have to be considered, such as in the case of developing and selecting adaptation policies. The various applications of NetSyMoD share the same approach for problem analysis and communication within the group of selected actors, based upon the use of creative thinking techniques, the formalisation of human-environment relationships through the DPSIR framework, and the use of multi-criteria analysis through a Decision Support System (DSS) software.Modelling, Public Participation, Natural Resource Management, Policy, Decision-Making, Governance, DSS

The identification of acquisition targets in the EU banking industry: An application of multicriteria approaches

In this paper we develop classification models for the identification of acquisition targets in the EU banking industry, incorporating financial variables that are mostly unique to the banking industry and originate from the CAMEL approach. A sample of 168 non-acquired banks matched with 168 acquired banks is used over the period 1998-2002, covering 15 EU countries. We compare and evaluate the relative efficiency of three multicriteria approaches, namely MHDIS, PAIRCLAS, and UTADIS, with all models developed and tested using a 10-fold cross validation approach. We find that the importance of the variables differs across the models. However, on the basis of univariate test and the results of the models we could state that in general after adjusting for the country where banks operate, acquired banks are less well capitalized and less cost and profit efficient. The results show that the developed models can achieve higher classification accuracies than a naïve model based on random assignments. Nevertheless, there is fair amount of misclassification that is hard to avoid given the nature of the problem, showing that as in previous studies for non-financial firms, the identification of acquisitions targets in banking is a difficult task. © 2006 Elsevier Inc. All rights reserved

A review of application of multi-criteria decision making methods in construction

Construction is an area of study wherein making decisions adequately can mean the difference between success and failure. Moreover, most of the activities belonging to this sector involve taking into account a large number of conflicting aspects, which hinders their management as a whole. Multi-criteria decision making analysis arose to model complex problems like these. This paper reviews the application of 22 different methods belonging to this discipline in various areas of the construction industry clustered in 11 categories. The most significant methods are briefly discussed, pointing out their principal strengths and limitations. Furthermore, the data gathered while performing the paper are statistically analysed to identify different trends concerning the use of these techniques. The review shows their usefulness in characterizing very different decision making environments, highlighting the reliability acquired by the most pragmatic and widespread methods and the emergent tendency to use some of them in combination