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

51 Pages Posted: 30 Jun 2017 Last revised: 30 Aug 2018

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: August 27, 2018

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 efficiency using DEA, with a focus on large panel datasets of financial accounting data. Using simulation and archival data, I examine three methodological considerations that arise when calculating efficiency with panel data: calculation group size, the choice of calculation group classification, and using subsets of efficiency scores calculated from larger datasets. I find that each of these issues potentially influences the efficiency scores generated by DEA. Based on these methodological issues, I provide evidence and prescriptions to aid researchers using DEA.

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 (August 27, 2018). Available at SSRN: https://ssrn.com/abstract=2995038 or http://dx.doi.org/10.2139/ssrn.2995038

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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