The model estimates the level of efficiency of corporate governance

Abstract

The majority of Russian enterprises have problems with updating their production assets and therefore are in dire need of investments. A huge role in the investment attractiveness of enterprises is provided by its corporate governance system. The lack of a well-developed stock market in Russia is not the last problem pushing investors away. The purpose of this work is to develop a mathematical model for assessing the effectiveness of corporate governance of the enterprise to make a decision on foreign investment in the oil industry corporation. In the sources available for analysis, insufficient attention is paid to the analysis and development of methods for assessing the effectiveness of corporate governance when deciding on the external investment of the corporation. In order to make a decision of a potential investor to invest in a company, the investor must have an idea of the activities of the company and its economic and financial indicators. The system of performance indicators of the corporation’s personnel, which affect its value, has a poorly structured structure. To solve the problems of weakly structured systems it is necessary to use fuzzy logic methods. These methods allow making qualitative assessment of activity of the enterprise and its administrative personnel, giving the chance to define level of management of the enterprise and quality of performers of work. Existing models of corporate governance performance assessment borrowed from abroad are not effective in Russia. The level of corporate governance in the company is determined using ratings from the major rating agencies such as S&P, RBC, EXPERT RA, CORE rating. But for this method of measurement, there is one important condition: the estimated company must be included in the lists of these agencies in order to monitor and analyze its corporate governance. However, often in Russia, not all companies are included in the list of rating agencies, especially if these companies belong to medium- sized businesses. In the paper the model of corporate governance efficiency evaluation is presented in the form of a system of components, each of which is formed from economic indicators, taking into account both the economic characteristics of the enterprise and the qualitative composition of its personnel and not tied to the quotes of the company’s shares in the stock markets. This model is built with the help of the method of fuzzy logic, which allows combining quantitative and qualitative indicators. Using the theory of fuzzy sets, the difference in the values of the initial indicators is eliminated when assessing the level of efficiency of corporate governance, and through operations on linguistic variables, the core component of the corporate governance level is combined. With the help of productive rules of fuzzy logic, the numerical components of the level of efficiency of corporate governance are given to fuzzy form. The developed model of decision-making of a potential investor about investing in an enterprise, based on the calculation of the assessment of the level of efficiency of its corporate governance, shows the potential investor the level of economic and financial management of the enterprise, the quality of management and working staff of the enterprise, promotes the decision on the feasibility of investing in corporations.