Standard Estimation, Standard Tightness, and Benchmarking: A Method with an Application to Nursing Services

Posted: 8 Sep 1998

See all articles by Rajiv D. Banker

Rajiv D. Banker

Temple University - Department of Accounting

Hsihui Chang

University of California, Riverside (UCR) - A. Gary Anderson Graduate School of Management

Somnath Das

University of Illinois at Chicago

Abstract

This paper presents a new method for estimating standards. Prior accounting research suggests the need for flexibility in setting standards in order to allow managers to make trade-offs between efficiency and attainability, and also between inputs with different relative prices to minimize cost. Stochastic Data Envelopment Analysis (SDEA) is adapted to introduce flexibility in setting standards and deriving mix and yield variances relative to comparative data from historical records or from other organizations. This approach to relative performance evaluation and benchmarking has practical appeal since industry level data is increasingly being shared as, for example, in the health care sector. Hospital nursing cost data are used to illustrate this approach.

JEL Classification: M40, M46

Suggested Citation

Banker, Rajiv D. and Chang, Hsihui and Das, Somnath, Standard Estimation, Standard Tightness, and Benchmarking: A Method with an Application to Nursing Services. Journal of Management Accounting Research, 1998. Available at SSRN: https://ssrn.com/abstract=124323

Rajiv D. Banker (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Hsihui Chang

University of California, Riverside (UCR) - A. Gary Anderson Graduate School of Management

Riverside, CA 92521
United States
951-827-4284 (Phone)

Somnath Das

University of Illinois at Chicago ( email )

601 South Morgan Street
University Hall, Room 2303
Chicago, IL 60607
United States
312-996-4482 (Phone)
312-996-4520 (Fax)

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