Modeling Profitability and Stock Market Performance of Listed Construction Firms on the Athens Exchange: Two-Stage DEA Approach

AbstractThe purpose of this paper is to evaluate the performance of a sample of nineteen construction firms listed on the Athens Exchange by applying a two-step procedure. In the first step, data envelopment analysis (DEA) is used to model performance in two dimensions: profitability efficiency and efficiency in the market value-generating process. This allows the independent identification of the most efficient level of input in minimizing resources and the most efficient level of output in maximizing market value, various benchmarks, and the local returns to scale patterns of the firms of the sample in both performance dimensions. Moreover, it is possible to examine whether a correlation exists between the performance efficiency scores. In the second step, regression models are used to identify the drivers of performance. Performance inefficiency is uncovered in both dimensions, but the real problem of inefficiency of the sampled firms is the lower level of performance in the market value-generating pro...

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