Knowledge-based management support: an application of diagnostic reasoning to corporate financing decisions

Authors: Binbasioglu M.^{1, *}; Zychowicz E.J.¹

Source: International Journal of Intelligent Systems in Accounting, Finance & Management, Volume 7, Number 4, December 1998 , pp. 199-211(13)

Publisher: John Wiley & Sons, Ltd.

Abstract:

The corporate finance application domain is studied as part of designing a diagnostic decision support system (DSS) for analyzing the financial ‘health’ of a modern corporation. A conceptual model of the financial management application domain is developed to capture the inherent interactions among financial domain objects. We view the objective of financial management to be to maintain a balance among financial performance measures, such as profitability, liquidity, dividend policy, and capital structure. We represent knowledge regarding these performance measures together with the related financial accounting data. A high-level structure to the diagnostic reasoning process is introduced via a classification scheme that identifies the relevant problem categories. The proposed approach supports the interpretation of domain relationships when formulating corrective measures. More importantly, it provides proactive management support by facilitating the analysis of domain facts for probable contingencies. The approach is illustrated with examples. Copyright © 1998 John Wiley & Sons, Ltd.

Keywords: decision support systems; corporate finance; diagnostic reasoning; financial management; classification method; constructive method

Language: English

Document Type: Research article

DOI: http://dx.doi.org/10.1002/(SICI)1099-1174(199812)7:4<199::AID-ISAF159>3.0.CO;2-Q

Affiliations: 1: Hofstra University, USA *

Publication date: 1998-12-01

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