Diego Prior

Are Socially Responsible Managers Really Ethical? Exploring the Relationship between Earnings Management and Corporate Social Responsibility

This study offers insights for policy makers and managers interested in enhancing CSR. For managers, our findings suggest that projecting a socially-friendly image in order to disguise earnings management cannot be sustained over time due to the detrimental effect on financial performance. In addition, this study provides a warning signal to policy makers that certain practices geared toward raising a firms CSR may simply be a mechanism for hindering other devious practices. This study draws on a generalized agency theory where managers are seen as the agents of all stakeholders and the earnings management literature to highlight that CSR can be used to garner support from stakeholders and, therefore, provides an opportunity for entrenchment to those managers that manipulate earnings. As such, it suggests new avenues of research for both the corporate governance literature, as well as for the stakeholder perspective. Using archival data from a multi-national panel sample of 593 firms from 26 countries between 2002 and 2004, we find a positive impact of earnings management practices on CSR; this relationship holds for different robustness checks. Also, we demonstrate that the combination of earnings management and CSR has a negative impact on financial performance. This paper investigates the connection between earnings management and corporate social responsibility (CSR). We argue that earnings management practices damage the collective interests of stakeholders; hence, managers who manipulate earnings can deal with stakeholder activism and vigilance by resorting to CSR practices.

Linear programming approaches to the measurement and analysis of productive efficiency

An important and rapidly growing empirical application of operations research techniques involves the measurement and analysis of the efficiency with which goods are produced and services are provided. The production activities whose efficiency has been the subject of investigation have varied widely, from profit-oriented industrial manufacturing enterprises all the way to public and private service providers operating in a not-for-profit environment. A similarly wide variety of operations research techniques has been utilized in the measurement and analysis of productive efficiency, ranging from stochastic parametric regressionbased methods to nonstochastic nonparametric mathematical programming methods. Foremost among the latter is a family of linear programming models collectively referred to as Data Envelopment Analysis (DEA). The purpose of this paper is to provide a selective overview of some of the most useful DEA models. I analyze these models in terms of their ability to accurately reflect the structure of the underlying production technology, their ability to accurately measure the productive efficiency of the producers being analyzed, and their data requirements and their sensivity to shortcomings in the data that form the basis of the analysis. The selectivity of the overview reflects my talents and my interests. Thus the orientation of the overview is toward the user of existing DEA models, not toward the developer of new models. In particular, the review is intended to inform practitioners in the fields of management science, economics and public administration who want to learn and

Environmental externalities and efficiency measurement

Production of desirable outputs often produces by-products that have harmful effects on the environment. This paper investigates technologies where the biggest good output producer is not the greatest polluter, i.e. technologies located on the downward-sloping segment of the frontier depicted in Färe et al. (1989). Directional distance functions and Data Envelopment Analysis techniques are used to define an algorithm that allows them to be identified empirically. Furthermore, we show that in such situations producers can contribute social goods, i.e. reducing polluting wastes, without limiting their capacity to maximise production of marketable output. Finally, we illustrate our methodology with an empirical application to a sample of Spanish ceramic tile producers.

Efficiency and total quality management in health care organizations: A dynamic frontier approach

This paper analyses hospital performance using Data Envelopment Analysis (DEA) and the Malmquist productivity index. We follow two approaches to quantify movements in productivity: (1) the traditional approach that only considers output and input variables; and (2) a more comprehensive approach that incorporates movements in quality and restricts some achievements, if quality is reduced. On the premise that the indicator for quality (nosocomial infections) is equivalent to a bad output, we explore the characteristics of, and compare the results of, the different technological ways to incorporate quality (good or bad attributes, strong or weak disposability technological assumptions). After discussing the virtues and limitations of the existing possibilities, the paper presents a better formulation that allows the preservation of TQM postulates. The decomposition in the Malmquist productivity index shows an improvement in productivity and a positive technical change, especially when quality is introduced.

Long- and Short-Term Cost Efficiency Frontier Evaluation: Evidence from Spanish Local Governments

This paper analyses the efficiency of Spanish local governments using non-convex frontier methods. More specifically, it analyses the total cost inefficiency and proposes its decomposition into three additive components: short-term variable cost inefficiency; capacity utilisation of fixed inputs; and scale inefficiency. The second and third components correspond to the long-term cost efficiency notion. The proposition is applied to a sample of Spanish municipal councils (municipalities with over 2,000 inhabitants located in Catalonia, the Spanish north-eastern region). The results confirm the existence of significant cost inefficiency coefficients related to both the long and short term.

Long- and short-run non-parametric cost frontier efficiency: An application to Spanish savings banks☆

The utilisation rate of installed capacity is a popular concept in both the performance appraisal literature and in publications on industrial organisation. However, a common consensus has yet to be reached concerning the most appropriate way to measure the capacity utilisation of physical inputs and its final effect on company results. On the one hand, there are approaches that establish capacity utilisation with reference to the maximum level of production that can be achieved. In contrast, there are other approaches more strictly related to economic analysis of operating costs. In this paper, our main objective is to define an analytical process that uses non-parametric frontier methodology to provide the distance between the total costs of a given unit and the short-run frontier costs. As a natural extension of this proposal, it is possible to compute the short-run inefficiency caused by a non-optimal dimension of the fixed inputs: we define this as capacityefficiency . The proposed evaluation process is applied to Spanish savings banks covering the period between 1986 and 1995. Throughout the period analysed, the greater part of cost inefficiency is due to capacity efficiency. 2002 Elsevier Science B.V. All rights reserved.

Measuring Productivity and Quality Changes Using Data Envelopment Analysis: An Application to Catalan Hospitals

This paper focuses on hospital performance using Data Envelopment Analysis (DEA) and Malmquist index numbers. We present a new approach that restricts achievement in productivity if quality is reduced. Results present an apparent negative evolution in productivity. The decomposition on the Malmquist index shows a clear improvement in technical quality, a convergence in efficiency between frontier and non-frontier hospitals and a theoretical fall in technical change (drop of the best practice frontier between years). The conclusions present reasoning justifying these results and propose the use of this methodology for the appraisal of effectiveness in the public sector.

Short and Long-Term Evaluation of Efficiency and Quality. An Application to Spanish Municipalities

This article analyses efficiency and quality levels in Spanish local governments and their determining factors through the application of the Data Envelopment Analysis methodology. It aims to discover to what extent inefficiency arises from both quality considerations and external factors beyond the organizations control, or alternatively, how much inefficiency is due to inadequate resource management. As a component of inadequate resource management, we test the existence of political-budgetary cycles in the temporal evolution of inefficiencies. The results show that on the whole there is still a wide margin within which local government efficiency and quality levels could be increased, although it is revealed that a great deal of inefficiency is due to exogenous or noncontrollable factors. In particular, it has been found that the size of the municipality, the per capita tax revenue, the per capita grants and the amount of commercial activity are some of the factors related with local government efficiency.

Technical efficiency and economies of diversification in health care

In national health services, where there is a tendency towards a lack of resources and a continuous increase in demand, it is necessary to implement decisions that promote efficiency. In this paper we focus on potential diversification economies as a strategy to increase efficiency levels.We evaluate the change in efficiency in Catalan hospitals between 1987 and 1992, and analyse the presence of possible diversification economies in each hospital. We use Data Envelopment Analysis, which does not need information on either input or output prices.The results are that the majority of hospitals could increase their efficiency and reduce their costs by diversification to the output-mix offered. Potential productivity gains are between 29% and 46%.

Technical efficiency and scope economies in hospitals

The main purposes are to develop a method for measuring the economies of scope, which involves the use of non-parametric production frontiers and does not require information on input prices; and to apply this method to individual hospital data drawn from a sample of Spanish hospitals. The results confirm the presence of technical inefficiencies and also of potential and non-exploited economies of scope. The combination that produces most economies of scope is that of gynaecology and paediatrics.