Data envelopment analysis (DEA) and financial ratios : a pro-stakeholders’ view of performance measurement for sustainable value creation of the wind energy

Purpose: The purpose of the paper is to explore business performance in a rather sensitive sector that equally combines economic, environmental and social dimensions. The paper investigates the efficiency of wind farm companies, in a framework of pursuing more diverse stakeholders’ interests Design/Methodology/Approach: Ratios and DEA approaches are combined to measure economic efficiency among the DMUs of a sample of wind farms, using data from their financial statements. Findings: Productivity and effectiveness comprise the performance measured by the economic efficiency. We show that by choosing inputs and outputs that are closely related in forming an appropriate financial ratio, it helps to design and explain more fully the impact of a policy intervention aiming at improving economic efficiency. DEA supplements ratios to design, implement and assess a strategy of benchmarking towards bolstering performance, that favors a wider range of stakeholders. Originality/Value: The study provides an in-depth insight into using Data Envelopment Analysis and financial ratios to study economic efficiency. The approach combines economic, social and environmental dimensions (indirectly) of performance, and the composite ratio Return on Total Assets (ROTA). The analysis caters the specific features of the sector renewable energy and their diverse stakeholders.peer-reviewe

Spatial differentiation of urban property prices as a repercussion in the aftermath of a civil disorder incident : the 2011 London case

Purpose: The purpose of the paper is to explore possible consequences on property prices in areas of London, ensuing the civil unrest of 2011. Design/Methodology/Approach: We studied the repercussion of the civil unrest on real estate prices through the application a difference in differences method of analysis. The case of London was chosen due to its well-developed property market and the availability of adequate, high quality and detailed data needed for this purpose. Findings: It was found that up to one year period after the end of the unrest, the effect seems to be statistically insignificant. The findings further suggest, that during the second and third year from the end of the turmoil, the civil unrest led to an approximately 5% decline in property prices in the affected areas of London. Practical Implications: This research study is an attempt to quantify the impact of London 2011 riots on property prices. The duration of the effect reflecting people’s perception regarding the risk associated with investing in these areas has not been determined. Riots combine the economic and the social impact. Originality/Value: Policy makers can better understand and estimate the repercussions of how urban economies interact with population and absorb localized ephemeral events. In that sense, it can be a vital aid in the hands of the administration in its duties to shape a more balanced and harmonic urban environment. Every shock though has its own distinct characteristics and doesn‘t affect the spatial dynamics in a uniform fashion across time.peer-reviewe

Sustainable business growth, value creation and dynamic competitive advantage : the Greek pharmaceutical industry

PURPOSE: The paper assesses the efficiency in the use of inputs and its impact in the value creation measured by the EBITDA return on assets of a company. The latter is utilized to judge whether the companies involved possess a dynamic competitive advantage which creates business value.DESIGN/METHODOLOGY/APPROACH: A two step Data Envelopment Analysis (DEA) was applied. Αn input oriented version of the model was employed, using financial data and ratios as inputs and outputs, concerning the Greek owned pharmaceutical companies which are almost entirely comprised of non listed in the Stock Exchange economic entities. In the 1st stage we measured the economic efficiency with which inputs are used. In the 2nd stage we assessed whether the economic efficiency leads effectively into the creation of a lasting competitive advantage, culminating in creating value (return on assets) above the average. We examined whether the efficiency and effectiveness of business ultimately explain the difference in their financial performance and the degree of value creation which is attributed to the endowment of VRIN resources and the existence of dynamic capabilities.FINDINGS: We found that the efficiency in the use of assets and equity financing explains the EBITDA return on assets, the market value (effectiveness) of equity and eventually the enterprise (EV). Sustainable business growth deciphers the value creation footprint attributed to a tangible dynamic competitive advantage.ORIGINALITY/VALUE: We argue that in the case of non listed companies, the level of value creation is measured by the effectiveness and efficiency in the use of assets and proficiencies employed. It is mirrored in the magnitude of the EBITDA return on assets and ultimately reflected in the enterprise valuation performance using multiples of value drivers such as revenues-sales and EBITDA (earnings).peer-reviewe

A strategic financial management evaluation of private hospitals’ effectiveness and efficiency for sustainable financing : a research study

Purpose: The purpose of the study is to evaluate the performance οf private hospitals and identify conditions that secure sustainable financing οf the sector. Design/Methodology/Approach: The Data Envelopment Analysis (DEA) was used as the main tool to measure efficiency and effectiveness among fifteen (15) major private hospitals in Greece. Audited financial statement data were analyzed as a basis for the assessment of their performance. Αn input oriented model was applied due to the fact that assets and employee expenses are more likely to be under the control of management in private hospitals, compared to revenues and CFFO. The latter were used as outputs that represent measures of effectiveness and efficiency respectively which secure sustainability. We opted for the Variable Return to Scale (VRS) version of DEA (in connection with the CRS one), since hospital are systems extremely depended on the human capital and the knowledge management, as a means of creating value and are characterized by non-linear dynamics. Findings: The great majority of the hospitals in the sample exhibit increasing and decreasing returns scale. Inefficiencies found to emanate from a non-optimal scale of the hospitals rather, than from management’s lack of capability to transform inputs to outputs. Practical Implications: The study aspires to frame options and help management to make informed choices that promote sustainable development of the private sector, which are also applicable to the public one. It is essential for public authorities to judge the meaningful performance of the private hospitals, to administer accordingly the level of its subsidies through public insurance funds, the claw back and rebate policies in a period of fiscal austerity and act accordingly to attract or deter the inflow of scalable private funds in healthcare to promote human wellbeing. Originality/Value: Performance differences, can be leveraged to guide improvements in the operation of the private hospitals and reforms in the health care system.peer-reviewe

An integrated financial ratio analysis as a navigation compass through the fraudulent reporting conundrum : a case study

Purpose: An integrated analysis of the consolidated financial statements of the Folli Follie group was performed to explore whether it is an effective apparatus ro reveal misleading reporting. Design/methodology/approach: Horizontal and vertical analysis, cash flows from operations, current accruals quality, profitability ratios, as well as the cash conversion cycle (CCC) and Piotroski models were applied. All of them worked harmoniously in a supplementary fashion to corroborate findings of distorted data reporting. Findings: Financial ratios had been derailed and remained unexplained by the prtinciples of financial management. It is attributed to fraudulent earnings management practices, that altered artificially specific financial data disproportionally. Practical implications: Αn integrated financial ratio analysis contributes to preventing or ameliorating the non-efficient allocation of resources associated with deplorable creative accounting practices, that creates welfare loses to the detriment of shareholders, stakeholders and ultimately to society as a whole. Originality/value: The analysis outcomes can be exploited as a red flags / whistle-blowing mechanism in cases of financial statement manipulation, since under these circumstances crucial financial ratios seem to derail. A holistic financial statement analysis is proven to represent a vital roadmap and an effective apparatus in forensic accounting, to secure that unfounded financial reporting based on spurious data will not easily get away unnoticed.peer-reviewe