SPEAFP Score Card – A Tool of the Corporate Star Rating | Original Article

ABSTRACT:

Stars are often used as symbols for classification purposes. They are used by reviewers for ranking things and positions such as electronics and electrics items, movies. TV shows, restaurants and hotels, Police and military [army and navy for the staffs] and other items which are directly related to environment. The star rating practices are not in use for the companies in India or in the world but from last one decade some corporate mutual fund houses are using Star word for ranking of various mutual fund schemes. In this study I am suggesting a model that examines investors' reliance on financial statement information, their perception of the frequency of fraud occurrence, the importance they place on fraud risk assessment as an investment activity, and, ultimately, their use of fraud red flags.. For this purpose I have developed a score card which can help in the corporate rating. This paper mainly discussed the importance of SPEAFP score card in star rating. Stars are often used as symbols for classification purposes. They are used by reviewers for ranking things and positions such as electronics and electrics items, movies, TV shows, restaurants and hotels, Police and military [army and navy for the staffs] and other items which are directly related to environment. For example, one to five stars is commonly employed to categorize hotels and restaurants, same as in police and army department three star is given to the inspectors and in mutual fund schemes Jive star or seven star given to the highly liquid and safe fund .In electronics and electrical items fire star rating is given to more energy saver product and one star rating is given to highly energy consumable product The star classification system is a common one for rating hotels and mutual fund schemes. In hotels higher star ratings indicate more luxury while in mutual fund it indicates best performed fund in a relating year. The star rating practices are not in use for the companies in India or in the world But from last one decade some corporate mutual fund houses are using Star word for ranking of various mutual fund schemes. Now my question is that Why? , we not use this word for the rating of Indian Corporate sectors. It is the need of hour, because in fast growing and changing financial environment investors of the company cannot judge companies' actual financial and non-financial performance or image on the basis of information given in the annual report. Suppose one company or companies' management having political relation with political leaders of ruling party. When political person gives unfair advantages to the company or management of the company, the performance of the company may increase and the market prices of company's share increase also but when news comes in the market about political relation with the management of company with ruling party or any political person, the market price of the company's may fall suddenly and company and its shareholders losses investment amount, like DLF, Jindel and steel power ltd and Indian cement ltd. So we must rank to the all corporate sectors which are playing in Indian financial market and listed their shares in BSE and NSE. For this purpose I have developed a score card which can help in the corporate rating. This paper mainly discussed the importance of SPEAFP score card in star rating.