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Operational and investment efficiency of investment trust companies: Do foreign firms outperform domestic firms?

Author

Listed:
  • Mohammad Nourani

    (Zhejiang University City College
    University of Waikato)

  • Qian Long Kweh

    (Canadian University Dubai)

  • Wen-Min Lu

    (Chinese Culture University)

  • Ikhlaas Gurrib

    (Canadian University Dubai)

Abstract

This study examines the efficiency of investment trust companies (ITCs) from 2011 to 2020 using a meta-frontier two-stage network data envelopment analysis (DEA) based on the directional distance function (DDF). We improved the accuracy of the efficiency measurement and added a network-based ranking component to rank the top-performing entities. In the group-specific technology assessment, foreign ITCs excel in investment efficiency. Meanwhile, in the meta-technology assessment, domestic ITCs outperform foreign ITCs in terms of both investment and operational efficiencies. Group-specific technology efficiency scores were found to be lower than or equal to the meta-technology efficiency scores for both the operational and investment stages. Based on the network-based ranking approach, Yuan Ta, a domestic ITC that ranked fourth in the operational stage and first in the investment stage, can be used as a reliable benchmark. This study will enable practitioners to gain a better understanding of the performance of ITCs operating under heterogeneous technologies.

Suggested Citation

  • Mohammad Nourani & Qian Long Kweh & Wen-Min Lu & Ikhlaas Gurrib, 2022. "Operational and investment efficiency of investment trust companies: Do foreign firms outperform domestic firms?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-26, December.
    • Handle: RePEc:spr:fininn:v:8:y:2022:i:1:d:10.1186_s40854-022-00382-1
    DOI: 10.1186/s40854-022-00382-1
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