Financial statement analysis: A bootstrapping approach in data envelopment analysis

This paper contrasts data envelopment analysis (DEA) and traditional ratio analysis (i.e. performance measurement by means of profitability ratios) as alternative approaches for assessing the performance of firms. Data on a sample of firms operating in the electricity, oil and gas industry in Greece are used for the comparison. We test the null hypothesis that there is no relationship between input-output DEA model scores following a bootstrapping approach and traditional accounting ratios of profitability as firm performance measures. The application of an alternative DEA ratio model using bias-corrected technical efficiency and return on equity (ROE) as component performance indicators provide similar results with these of input-output DEA model, in terms of ranking of firms. Therefore, performance measurement by means of ratio analysis and DEA can be used and it is probably recommended to use them as complements to each other for the evaluation of performance of firms.