Data Envelopment Analysis and Accounting Measures

Abstract

This paper surveys the growing stream of DEA research that uses only accounting measures, which we term “FinDEA”. Our analysis of 280 FinDEA studies from 1990 to 2023, identified 322 models using a diversity of firm performance constructs and accounting measures. The breadth of firm performance, nature and variety of accounting measures, and approaches used in this research stream introduce new challenges beyond those faced in conventional DEA research. We develop a hierarchical framework of FinDEA illustrating how various models focus on a range of hierarchical organisational aspects, leading to diverse interpretations of performance and differing selections of accounting measures. This diversity, however, is often unacknowledged by accounting researchers, where reliance on prior literature or direct adoption of FinDEA models is common. The hierarchical framework provides a continuum of firm performance constructs used in FinDEA research and highlights considerations and suggestions for future researchers and readers around model design and evaluation.