Calculating Efficiency with Financial Accounting Data: Data Envelopment Analysis for Accounting Researchers

51 Pages Posted: 28 Jun 2017

See all articles by Peter R. Demerjian

Peter R. Demerjian

University of Washington - Michael G. Foster School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: June 28, 2017

Abstract

Recent years have seen a preponderance of accounting research using data envelopment analysis (DEA) to measure efficiency. In this study, I examine the calculation of DEA efficiency, with a focus on large panel datasets of financial accounting information. Using simulation and archival data, I examine four methodological considerations that arise when calculating efficiency with panel data: calculation group size, measuring efficiency over multiple time periods, the choice of calculation group classification, and using subsets of efficiency values calculated from larger datasets. I find that each of these potentially influences the efficiency generated by DEA. Based on these methodological issues, I provide evidence and prescriptions to aid researchers using DEA in designing studies.

Keywords: Data Envelopment Analysis, Financial Accounting, DEA

JEL Classification: C61, C67, M41

Suggested Citation

Demerjian, Peter R., Calculating Efficiency with Financial Accounting Data: Data Envelopment Analysis for Accounting Researchers (June 28, 2017). Available at SSRN: https://ssrn.com/abstract=2993687 or http://dx.doi.org/10.2139/ssrn.2993687

Peter R. Demerjian (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

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