Investigation on firm efficiency: evidence from selected Asia-Pacific countries

Purpose–The purpose of this paper is to examine the firm efficiency or technical efficiency (TE),pure technical efficiency (PTE) and scale efficiency (SE) in the selected developed and developingAsia-Pacific countries.Design/methodology/approach–The sample consists of a sum of 700 firms in selected developed anddeveloping Asia-Pacific countries over the period from 2009 to 2015. The non-parametric data envelopmentanalysis under the production approach is used to investigate firm efficiency.Findings–On average, this paper discovers that the firms in selected Asia-Pacific countries are moderatelyefficient. Scale inefficiency (SIE) is found to be the dominant source of firms’technical inefficiency. Theanalysis of return to scale shows that the large firms tend to operate at decreasing return to scale level, whilethe small firms tend to operate at increasing return to scale level.Practical implications–The findings from this paper provide significant insights to the policy makers andfirm managers in promoting the efficient firms of Asia-Pacific countries.Originality/value–The present paper conducts a critical analysis on return to scale in the firms sector ofAsia-Pacific context, which is ignored by the past studies on firm efficiency since the analysis of return toscale is mostly emphasized on banking sector. The precise nature of SIE is important for a firm to be efficientin achieving the firm’s primary goals of profit maximization and sustaining market competitiveness

Firm efficiency in selected developed and developing East Asia countries: using data envelopment analysis

Drawing on the significance of firm efficiency in attaining the primary firms’ goal of profit maximization, the paper aims to examine the firm efficiency or technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) level in the selected East Asia countries during the period of 2009-2015, by employing the non-parametric Data Envelopment Analysis (DEA) based on the production approach. The efficiency level of firms in selected East Asia countries is found to be moderate, by experiencing the mean TE of 53.40per cent with input waste of 46.60per cent during the years 2009-2015. The paper find that the scale inefficiency (SIE) is the dominant source of inefficiency of firms. Furthermore, the paper reveals that the large firms are generally showed decreasing return to scale (DRS); while the small firms are commonly exhibited increasing return to scale (IRS). Finally, the paper concludes that the firms in selected developed countries are found to exhibit higher mean TE than those firms in selected developing countries

Firm efficiency and board busyness: empirical evidence in Southeast and Northeast Asia

Drawing on technical efficiency concept, the production of outputs from the inputs of firms is theoretically associated with firm managerial factors. This study therefore attempts to empirically investigate the relationship between board busyness and firm efficiency in selected countries of Southeast and Northeast Asia region for seven years. This study first measures technical efficiency of firms by using non-parametric Data Envelopment Analysis (DEA). Predominantly, this study investigates the proposed relationships of board busyness and firm efficiency by performing panel regression analysis. The results from regression analysis show that the board busyness significantly reduces firm efficiency, supporting the busyness hypothesis. The significant practical implications of study include: firstly, the managers who pursue to enhance firm efficiency in achieving the goals of profit maximization are encouraged to prevent their firms from having busy boards. Secondly, the regulators and policy-makers who intend to prevent the overcommitted issue of busy boards are suggested to review and enforce the restrictions and regulations on board busyness. Thirdly, the potential investors who intend to make investment are urged to consider busy boards as an unfavourable signal

Does directors’ experience positively moderate the impact of board busyness on firm efficiency? evidence from Asia-Pacific

Purpose: The purpose of this paper is to examine the impact of board busyness on firm efficiency in the context of directors’ experience, specifically on directors’ experience that moderates the impact of board busyness on firm efficiency. Directors’ experience is examined by exploring both depth (board tenure) and breadth (number of former listed directorship) of experience. Design/methodology/approach: This paper employs data envelopment analysis (DEA) to examine firm efficiency. Then, fixed effect panel regression analysis is applied to test the direct and moderating effect based on a sample of firms in the selected Asia-Pacific countries. Findings: Significant positive evidence for the moderating effect of directors’ experience on the impact of board busyness on firm efficiency is documented. Practical implications: Findings are essential for managers, country policymakers and potential investors as inputs to improve the current company practices, laws and policies through the notion that directors’ experience does enable the busy board to contribute to improved firm efficiency. Originality/value: This paper contributes to the debated perspectives on board busyness by providing initial evidence that directors’ experience positively moderates the impact of board busyness on firm efficiency

Do Islamic versus conventional banks progress or regress in productivity level?

This study assesses the differences between Islamic and conventional bank’s productivity. Earlier studies on bank productivity focused on conventional banks, but few have been done on Islamic banks. Therefore, the present study attempts to close the gap in the literature by investigating the productivity of Islamic and conventional banks in the context of the Middle East, Southeast Asia and South Asia regions. The sample is comprised of 385 banks (66 Islamic banks and 319 conventional banks) from 18 countries with data observations from 2008 to 2017. Panel data techniques with DEA-based MPI will be employed to investigate the impact of selected important factor and bank productivity as indicated by total factor productivity changes (TFPCH). Based on the results, Islamic banks are more productive than conventional banks and the results from t test are further confirmed by the results from nonparametric tests. These results are attributed to the progress in EFFCH. However, the mean difference between Islamic and conventional banks TFPCH is not statistically significant in all regions. The main benefit is that this work will hopefully provide additional insight and complement the existing studies on bank productivity of Islamic and conventional banks that are important to the banks, regulations, investors and researchers

Impact of country’s governance dimensions on bank revenue efficiency: overview on middle east, Southeast Asia, and South Asia countries

This study attempts to discover the impact of the limitation of a country’s governance on Islamic and conventional bank revenue efficiency by using data from the countries of three regions. Non-parametric Data Envelopment Analysis (DEA) employed to measure the bank revenue efficiency level. The applied method of estimation consists of pooled Ordinary Least Square (OLS), Fixed Effect Model (FEM), Random Effect Model (REM), and the Generalized Method of Moments (GMM) to examine the impact of country governance and other potential determinants on bank efficiency. This study finds out that the dimensions of voice and accountability positively influenced Islamic and conventional bank revenue efficiency, however, the political stability and absence of violence and control of corruption provided the negative relationship. Furthermore, other dimensions of regulatory quality, government effectiveness and rule of law significantly negative with the conventional bank revenue efficiency. Implications from the study allow the related parties to identify the significant dimensions of a country’s governance to the efficiency of the banks to ensure better bank performance

Price efficiency on Islamic banks vs. conventional banks in Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia: impact of country governance

This research investigate the impact of six dimensions of country governance to the price efficiency of Islamic and conventional banks. The empirical analysis is focused on the Islamic and conventional banks operating in the Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia countries. The data envelopment analysis (DEA) method applied to compute the revenue efficiency of Islamic and conventional banks. Then used the Multivariate Panel Regression Analysis with the Ordinary Least Square as an estimation method to investigate the potential determinants and the effect of country governance on the revenue efficiency. The empirical findings indicate that greater voice and accountability, political stability, regulatory quality, rule of law and control of corruption enhance the revenue efficiency of both Islamic and conventional banks. The dimension of government effectiveness exerts positive sign relationship with the banks revenue efficiency only on conventional banks

Impact of board busyness, directors’ education and experience on firm efficiency in selected Asia-Pacific countries

The primary objective of firms is to maximize profit in sustaining the market competitiveness, which is based to the microeconomic theory of firms. To attain the goal of profit maximization, technical efficiency (TE) of firms is significantly important. Based on the concept of technical efficiency, the production of outputs from the inputs relates to managerial factors of firms. To date, previous studies on firm efficiency are dominated by the determinants of firm-specific characteristics and macroeconomic factors. Therefore, past studies overlook the impact of firms’ managerial factors; especially board busyness on firm efficiency. Board busyness is referred to the busyness level of boards of directors (BOD) among firms. Consequently, the study first aims to extend past studies by examining the relationship between board busyness and firm efficiency in the selected developed and developing countries of the Asia-Pacific (AP) region, a leader of world economic growth. Moreover, the extant literature on board busyness has pointed to a lack of clarification on the long-debated impact of board busyness towards firms. To explain the conflicting impact of board busyness, the study next aims to investigate the moderating impact of directors’ education and experience on the relationship between board busyness and firm efficiency in the selected developed and developing AP countries. The analysis of the study comprises two main stages. In the first stage, Data Envelopment Analysis (DEA) method via production approach is adopted to measure the TE scores of firms. The study discovers that the firms in all selected AP countries are not operating at a relatively optimal scale of efficiency, even though these firms have been managerially efficient to exploit their resources fully during 2009 to 2015. Furthermore, the study discovers that the TE level of the firms in selected developed AP countries is significantly higher compared to the firms in selected developing AP countries, on average.In the second stage, Generalized Least Square (GLS) panel regression analysis based on fixed effect method (FEM) is performed to examine the proposed relationships in relates to directors’ education, directors’ experience, board busyness and firm efficiency. Overall, the empirical findings reveal that the board busyness significantly impacts firm efficiency in all selected AP countries. In the case of directors with higher educational level, the board busyness (i.e. based on median number of external directorships) is significantly unfavourable to firm efficiency. However, in the case of directors with greater experience level (i.e. longer board tenure), board busyness (i.e. based on rule of thumb of three external directorships) is significantly favourable to firm efficiency. The findings are parallel to the firms in selected developed AP countries, where board busyness (i.e. based on median number and rule of thumb three external directorships) significantly impacts firm efficiency. In the matter of directors with higher educational level, board busyness (i.e. based on mean number and rule of thumb of three external directorships) is significantly favourable to firm efficiency. Nevertheless, in the matter of directors with greater experience level (i.e. longer board tenure and greater number of past directorships), board busyness (i.e. based on median number and rule of thumb of three external directorships) is significantly unfavourable to firm efficiency. Likewise in selected developing AP countries, the board busyness (i.e. based on mean number of external directorships) significantly impacts; reduces firm efficiency. Yet, the empirical findings fail to show any significant moderating impact of directors’ education and experience towards the board busyness-firm efficiency relationship. Overall, the study contributes to the firm management for the formulation and implementation of new strategies in improving usage of firms’ resources and to become technically efficient in achieving the goal of profit maximization. Moreover, the study contributes to the policy-makers as the inputs to improve current corporate governance policies. Next, the study contributes to potential investors in making informed investment decision. The study also contributes to the academicians and practitioners in providing informative knowledge and gaps filling on existing finance and efficiency literature

Firm efficiency of East Asia countries: the impact of board busyness

This study aims to examine the impact of board busyness on firm efficiency under the concept of technical efficiency. By employing conventional agency theory and busyness hypothesis, the logical relationships between board busyness and firm efficiency are established. In the first stage of analysis, this study employs data envelopment analysis (DEA) to investigate firm efficiency. While in the second stage of analysis, this study adopts panel regression analysis to empirically examine the proposed effect of board busyness on firm efficiency, based on a sample of 400 listed firms in the countries of significant East Asia region from 2009 to 2015. This study discovers the significant and negative impact of board busyness on firm efficiency, suggesting that the busy board significantly impedes firm efficiency due to their overcommitted issue and therefore consistent with busyness hypothesis and agency theory. This study highlights practical implication for managers who pursue to enhance firm efficiency in attaining the goals of profit maximization by understanding how board busyness impacts the firm efficiency. In addition, this study calls for regulators and government policymakers to review the restrictions on board busyness in preventing the overcommitted issue of busy boards

Moderation of directors’ education on board busyness-firm efficiency

Purpose: The purpose of this paper is to enhance the understanding of the long-debated impact of board busyness within a new framework of firm efficiency in the selected developed and developing Asia–Pacific countries, by assessing the moderation of directors' education towards the relationship between board busyness and firm efficiency. The extant literature on board busyness demonstrates to a lack of clarification of the relationship between board busyness and firm efficiency. Design/methodology/approach:The sample for this paper comprises a panel data of 800 firms in a cross-country context of the selected developed and developing Asia–Pacific countries during the recent period of 2009–2015. This paper performs a non-parametric Data Envelopment Analysis to measure firm efficiency and panel regression analysis to examine the moderation of directors' education. Findings: This paper provides support for the busyness hypothesis by documenting that the busy boards are likely to reduce firm efficiency. Moreover, this paper renders support to the upper-echelons theory by demonstrating that the impact of board busyness on firm efficiency is likely to turn positive in the presence of directors' education. Practical implication: This paper highlights practical implication for managers especially in the Asia–Pacific region who seek to enhance firm efficiency, which is essential for firms in attaining the primary goal of profit maximization. Originality/value: This paper builds on the extant literature by providing a contemporary research path regarding the moderation of directors' education to explain the long-debated impact of board busyness within a new framework of firm efficiency, based on a recent and significant sample of Asia–Pacific countries