IDEAS home Printed from https://ideas.repec.org/a/cem/jaecon/v11y2008n2p281-303.html
   My bibliography  Save this article

Profit inefficiency of Japanese securities firm

Author

Abstract

We develop a new indicator of profit inefficiency, which is based on decision-makers choosing the amount to spend on each input and the amount to earn on each output, rather than choosing physical quantities of inputs and outputs. The method is suitable for situations when prices and quantities are not directly observable, when markets are non-competitive, or when qualitative differences exist for inputs and outputs between firms. The indicator of profit inefficiency equals normalized lost profits arising from technical inefficiency and allocative inefficiency. We offer an empirical example of our method using firms in the Japanese securities industry during the period 1989-2005. We find profit inefficiency rises from 1989 to 1993, declines during the 1994-2001 period, and then increases during the years 2002-2005. Allocative inefficiency tends to be a greater source of profit inefficiency than technical inefficiency. Lost profits as a percent of assets range from 0% to 15% and are highest in 2002-2005.

Suggested Citation

  • Hirofumi Fukuyama & William L. Weber, 2008. "Profit inefficiency of Japanese securities firm," Journal of Applied Economics, Universidad del CEMA, vol. 11, pages 281-303, November.
  • Handle: RePEc:cem:jaecon:v:11:y:2008:n:2:p:281-303
    as

    Download full text from publisher

    File URL: https://ucema.edu.ar/publicaciones/download/volume11/fukuyama.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alireza Amirteimoori & Biresh K. Sahoo & Saber Mehdizadeh, 2023. "Data envelopment analysis for scale elasticity measurement in the stochastic case: with an application to Indian banking," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-36, December.
    2. Mayer, Andreas & Zelenyuk, Valentin, 2014. "Aggregation of Malmquist productivity indexes allowing for reallocation of resources," European Journal of Operational Research, Elsevier, vol. 238(3), pages 774-785.
    3. Andreas Mayer & Valentin Zelenyuk, 2018. "Aggregation of Individual Efficiency Measures and Productivity Indices," CEPA Working Papers Series WP012018, School of Economics, University of Queensland, Australia.
    4. Fukuyama, Hirofumi & Matousek, Roman & Tzeremes, Nickolaos G., 2023. "Estimating the degree of firms’ input market power via data envelopment analysis: Evidence from the global biotechnology and pharmaceutical industry," European Journal of Operational Research, Elsevier, vol. 305(2), pages 946-960.
    5. Walheer, Barnabé & Zhang, Linjia & Luo, Yingchan, 2020. "Bidirectional technological spillover in the Chinese star-rated hotel sector: An empirical investigation," Economic Modelling, Elsevier, vol. 86(C), pages 210-226.
    6. Laurens Cherchye & Bram De Rock & Veerle Hennebel, 2017. "Coordination efficiency in multi-output settings: a DEA approach," Annals of Operations Research, Springer, vol. 250(1), pages 205-233, March.
    7. Cherchye, Laurens & De Rock, Bram & Walheer, Barnabé, 2016. "Multi-output profit efficiency and directional distance functions," Omega, Elsevier, vol. 61(C), pages 100-109.
    8. Karagiannis, Giannis, 2023. "Decomposition and aggregation of tone efficiencies," Omega, Elsevier, vol. 119(C).
    9. Barnabé Walheer, 2019. "Dynamic directional nonparametric profit efficiency analysis for a single decision-making unit: an aggregation approach," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 41(4), pages 1123-1149, December.
    10. Juo, Jia-Ching & Fu, Tsu-Tan & Yu, Ming-Miin & Lin, Yu-Hui, 2015. "Profit-oriented productivity change," Omega, Elsevier, vol. 57(PB), pages 176-187.
    11. Yu, Ming-Miin, 2020. "Nerlovian profit inefficiency in non-fully-competitive settings: Definition and decomposition," Omega, Elsevier, vol. 90(C).
    12. Nan Zhu & Yi Liu & Ali Emrouznejad & Qiang Huang, 2017. "An allocation Malmquist index with an application in the China securities industry," Operational Research, Springer, vol. 17(2), pages 669-691, July.
    13. Zhao, Yu & Morita, Hiroshi & Maruyama, Yukihiro, 2019. "The measurement of productive performance with consideration for allocative efficiency," Omega, Elsevier, vol. 89(C), pages 21-39.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cem:jaecon:v:11:y:2008:n:2:p:281-303. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valeria Dowding (email available below). General contact details of provider: https://edirc.repec.org/data/cemaaar.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.