Outstanding Paper - Emerald

International Journal of
Intelligent Computing
and Cybernetics
Outstanding Paper
Weaving the social fabric: the past, present and
future of optimization problem solving with
cultural algorithms
Robert G. Reynolds
Xiangdong Che
Computer Science Department, Wayne State University,
Detroit, Michigan, USA
Mostafa Ali
Department of Computer Information Systems,
Jordan University of Science and Technology,
Irbid, Jordan
Abstract
Purpose – The purpose of this paper is to investigate the
performance of cultural algorithms (CAs) over a complete range of
optimization problem complexities, from fixed to chaotic and
specifically observing whether there is a given homogeneous agent
topology within a culture which can dominate across all
complexities.
Design/methodology/approach – In order to apply the CA overall
complexity classes it was necessary to generalize on its
co-evolutionary nature to keep the variation in the population across
all complexities. First, previous CA approaches were reviewed.
Based on this the existing implementation was extended to produce
a more general one that could be applied across all complexity
classes. As a result a new version of the cultural algorithms toolkit,
CAT 2.0, was produced, which supported a variety of
co-evolutionary features at both the knowledge and population
levels. The system was applied to the solution of a 150 randomly
generated problems ranging from simple to chaotic complexity
classes.
Findings – No homogeneous social fabric tested was dominant
over all categories of problem complexity; as the complexity of
problems increased so did the complexity of the social fabric that
was need to deal with it efficiently. A social fabric that was good for
fixed problems might be less adequate for periodic problems, and
chaotic ones.
Originality/value – The paper presents experimental evidence that
social structure of a cultural system can be related to the frequency
and complexity type of the problems that presented to a cultural
system.
Keywords Cultural algorithm, Multi-agent simulation, Complexity,
Social fabric
www.emeraldinsight.com/10.1108/17563781011094179
IJICC
Volume 3 Number 4, 2010, pp. 561-92
Editor: Haibin Duan
35
International Journal of
Law and Management
Outstanding Paper
The United Kingdom’s Companies Act of 2006
and the capital asset pricing model: attaining
the corporate objective
S. Paulo
Commerce Division, Lincoln University, Canterbury, New
Zealand
Abstract
Purpose – The purpose of this paper is to consider the attainment
of the corporate objective of the UK Companies Act of 2006 Section
172(1) from the perspective of financial valuations that are reliant on
the cost of capital. The cost of capital plays an important role in
many of the models and propositions that are routinely used for
financial valuation and decision making.
Design/methodology/approach – From the perspective of
financial valuations that are used to guide decision making that is in
accordance with the corporate objective of the UK Companies Act of
2006 Section 172(1), managers and directors require a valid,
reliable, and interpretable cost of capital. The theory, models, and
propositions of financial management, whether they be investment,
financing, or distributions (Sections 829-853) decisions, are
dependent on the cost of capital. This paper has three main tasks.
First, the relevant sections of UK corporate statute with regard to the
corporate objective need to be identified and presented. Second, a
brief review of the function and role of the cost of capital for the
valuations upon which investment, financing, and dividend
decisions are based, is undertaken to ensure that the role and
function of this key financial metric is clearly recognized. Third,
since the capital asset pricing model (CAPM) is so widely and
exclusively used, often without recourse to other approaches to
calculation of the cost of capital, an update of CAPM empirical
evidence is undertaken to affirm the 2004 findings and subsequent
recommendations by Fama and French that the CAPM is not an
acceptable way of calculating the cost of capital.
Findings – It is doubtful whether directors, who use an empirically
invalid and unreliable valuation model such as the CAPM to
calculate the cost of capital, will be able to meaningfully and
purposefully make decisions consistent with the ‘‘enlightened
shareholder value’’. Managers and directors need to use
approaches to the cost of capital that are valid and can be
empirically verified.
Practical implications – This paper recommends that directors of
public companies who make decisions using financial valuations
that embody the cost of capital should ensure that models other
than the CAPM are used; otherwise, they may find it difficult unable
to defend challenges to their statutory duty of attaining the corporate
objective.
Originality/value – An update of CAPM empirical evidence is
undertaken to affirm the findings and subsequent recommendations
by Fama and French that the CAPM is not an acceptable way of
calculating the cost of capital.
Keywords Capital asset pricing model, Cost of capital, Directors,
Legislation, Strategic objectives, United Kingdom
www.emeraldinsight.com/10.1108/17542431011059313
IJLMA
Volume 52 Number 4, 2010, pp. 253-64
Editors: Chris Gale and Clive Smallman