IDEAS home Printed from https://ideas.repec.org/a/wly/ijfiec/v26y2021i3p3352-3376.html
   My bibliography  Save this article

Dynamic operating efficiency and its determining factors of listed real‐estate companies in China: A hierarchical slack‐based DEA‐OLS approach

Author

Listed:
  • Ebenezer Fiifi Emire Atta Mills
  • Mavis Agyapomah Baafi
  • Fangbiao Liu
  • Kailin Zeng

Abstract

This study uses a dynamic slacks‐based measure (SBM) model in a data envelopment analysis (DEA) framework with surplus reserve and accounts receivable as desirable and undesirable indicators respectively, based on inter‐connectivity between consecutive periods to estimate the operating efficiency of 110 listed Chinese real‐estate companies in the first step analysis. The results show that 35 listed real‐estate companies in China operated on the efficient frontier by maintaining sustainable growth throughout the entire period. The analysis presents the projection of indicators to suggest a feasible solution to improve the inefficient terms. At the second step analysis, using ordinary least square (OLS) estimation, authors find a curve‐linear relationship between real‐estate company size and efficiency to suggest that operating efficiency increases as size also increases due to economies of scale but only up to an optimum point. Profitability and higher education are also identified as the other significant determinants of operating efficiency. The findings of this research present evidence that average efficiency scores vary over time and generally comove with China's economic growth rate and the average stock returns in the real‐estate sector. By providing a new framework for evaluating input, output and carry‐over indicators of real‐estate companies, the results of this study equip real‐estate companies to have an accurate perspective of their operating position and simultaneously provide investors with an avenue to evaluate real‐estate companies' development before any form of investment.

Suggested Citation

  • Ebenezer Fiifi Emire Atta Mills & Mavis Agyapomah Baafi & Fangbiao Liu & Kailin Zeng, 2021. "Dynamic operating efficiency and its determining factors of listed real‐estate companies in China: A hierarchical slack‐based DEA‐OLS approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3352-3376, July.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:3:p:3352-3376
    DOI: 10.1002/ijfe.1965
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/ijfe.1965
    Download Restriction: no
    File URL: https://libkey.io/10.1002/ijfe.1965?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brent W. Ambrose & Michael J. Highfield & Peter D. Linneman, 2005. "Real Estate and Economies of Scale: The Case of REITs," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 33(2), pages 323-350, June.
    2. Fadzlan Sufian & Muzafar Shah Habibullah, 2010. "Developments in the efficiency of the Thailand banking sector: a DEA approach," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(3), pages 226-245, September.
    3. Tone, Kaoru & Tsutsui, Miki, 2010. "Dynamic DEA: A slacks-based measure approach," Omega, Elsevier, vol. 38(3-4), pages 145-156, June.
    4. Cooper, W. W. & Seiford, Lawrence M. & Thanassoulis, Emmanuel & Zanakis, Stelios H., 2004. "DEA and its uses in different countries," European Journal of Operational Research, Elsevier, vol. 154(2), pages 337-344, April.
    5. Pang-tien Lieu & Tsai-lien Yeh & Yung-ho Chiu, 2005. "Off-balance sheet activities and cost inefficiency in Taiwan's Banks," The Service Industries Journal, Taylor & Francis Journals, vol. 25(7), pages 925-944, October.
    6. Farhana Ismail & M. Shabri Abd. Majid & Rossazana Ab. Rahim, 2013. "Efficiency of Islamic and conventional banks in Malaysia," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 11(1), pages 92-107, June.
    7. A. Charnes & W. W. Cooper & E. Rhodes, 1981. "Evaluating Program and Managerial Efficiency: An Application of Data Envelopment Analysis to Program Follow Through," Management Science, INFORMS, vol. 27(6), pages 668-697, June.
    8. Brijesh C. Purohit & S. Saravanan, 2018. "Sustainability and Efficiency of Microfinance Institutions in South Asia," Working Papers 2018-172, Madras School of Economics,Chennai,India.
    9. Li, Ying & Chiu, Yung-ho & Lu, Liang Chun, 2018. "Energy and AQI performance of 31 cities in China," Energy Policy, Elsevier, vol. 122(C), pages 194-202.
    10. McDonald, John, 2009. "Using least squares and tobit in second stage DEA efficiency analyses," European Journal of Operational Research, Elsevier, vol. 197(2), pages 792-798, September.
    11. Guo, Xiaoying & Lu, Ching-Cheng & Lee, Jen-Hui & Chiu, Yung-Ho, 2017. "Applying the dynamic DEA model to evaluate the energy efficiency of OECD countries and China," Energy, Elsevier, vol. 134(C), pages 392-399.
    12. Cheng, Gang & Zervopoulos, Panagiotis & Qian, Zhenhua, 2013. "A variant of radial measure capable of dealing with negative inputs and outputs in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 225(1), pages 100-105.
    13. Zha, Yong & Liang, Nannan & Wu, Maoguo & Bian, Yiwen, 2016. "Efficiency evaluation of banks in China: A dynamic two-stage slacks-based measure approach," Omega, Elsevier, vol. 60(C), pages 60-72.
    14. Brijesh C. PUROHIT & S. SARAVANAN, 2018. "Sustainability and efficiency of microfinance institutions in South Asia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(617), W), pages 97-120, Winter.
    15. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
    16. Charnes, A. & Cooper, W. W. & Rhodes, E., 1979. "Measuring the efficiency of decision-making units," European Journal of Operational Research, Elsevier, vol. 3(4), pages 339-338, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Phi-Hung Nguyen & Thi-Ly Nguyen & Hong-Quan Le & Thuy-Quynh Pham & Hoang-Anh Nguyen & Chi-Vinh Pham, 2023. "How Does the Competitiveness Index Promote Foreign Direct Investment at the Provincial Level in Vietnam? An Integrated Grey Delphi–DEA Model Approach," Mathematics, MDPI, vol. 11(6), pages 1-30, March.
    2. Yi Zheng & Min Luo, 2023. "Enhancing Operating Efficiency in China’s High-End Equipment Manufacturing Industry: Insights from Listed Enterprises," Sustainability, MDPI, vol. 15(11), pages 1-18, May.
    3. Mushtaq, Zulqarnain & Wei, Wei & Jamil, Ihsan & Sharif, Maimoona & Chandio, Abbas Ali & Ahmad, Fayyaz, 2022. "Evaluating the factors of coal consumption inefficiency in energy intensive industries of China: An epsilon-based measure model," Resources Policy, Elsevier, vol. 78(C).
    4. Hirofumi Fukuyama & Yong Tan, 2023. "Estimating market power under a nonparametric analysis: evidence from the Chinese real estate sector," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 45(2), pages 599-622, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ebenezer Fiifi Emire Atta Mills & Siegfried Anyomi & Mavis Agyapomah Baafi & Prasad Siba Borah, 2022. "A dynamic SBM‐DEA and portfolio formation test approach to the operating efficiency‐stock returns nexus," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3095-3106, October.
    2. Chia-Nan Wang & Quoc-Chien Luu & Thi-Kim-Lien Nguyen & Jen-Der Day, 2019. "Assessing Bank Performance Using Dynamic SBM Model," Mathematics, MDPI, vol. 7(1), pages 1-13, January.
    3. Fang-Rong Ren & Ze Tian & Yu-Ting Shen & Yung-Ho Chiu & Tai-Yu Lin, 2019. "Energy, CO 2 , and AQI Efficiency and Improvement of the Yangtze River Economic Belt," Energies, MDPI, vol. 12(4), pages 1-17, February.
    4. Liang Chun Lu & Yung-ho Chiu & Shih-Yung Chiu & Tzu-Han Chang, 2022. "Do Forests help environmental development of Cities in China?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(5), pages 6602-6629, May.
    5. Atta Mills, Ebenezer Fiifi Emire & Zeng, Kailin & Fangbiao, Liu & Fangyan, Li, 2021. "Modeling innovation efficiency, its micro-level drivers, and its impact on stock returns," Chaos, Solitons & Fractals, Elsevier, vol. 152(C).
    6. Xiong, Xi & Yang, Guo-liang & Guan, Zhong-cheng, 2020. "Estimating the multi-period efficiency of high-tech research institutes of the Chinese Academy of Sciences: A dynamic slacks-based measure," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    7. Liu, John S. & Lu, Louis Y.Y. & Lu, Wen-Min & Lin, Bruce J.Y., 2013. "Data envelopment analysis 1978–2010: A citation-based literature survey," Omega, Elsevier, vol. 41(1), pages 3-15.
    8. Zhen Shi & Fengping Wu & Huinan Huang & Xinrui Sun & Lina Zhang, 2019. "Comparing Economics, Environmental Pollution and Health Efficiency in China," IJERPH, MDPI, vol. 16(23), pages 1-30, December.
    9. Petridis, Konstantinos & Tampakoudis, Ioannis & Drogalas, George & Kiosses, Nikolaos, 2022. "A Support Vector Machine model for classification of efficiency: An application to M&A," Research in International Business and Finance, Elsevier, vol. 61(C).
    10. Kao, Chiang, 2022. "Measuring efficiency in a general production possibility set allowing for negative data: An extension and a focus on returns to scale," European Journal of Operational Research, Elsevier, vol. 296(1), pages 267-276.
    11. Xiangyu Teng & Fan‐peng Liu & Yung‐ho Chiu, 2020. "The impact of coal and non‐coal consumption on China's energy performance improvement," Natural Resources Forum, Blackwell Publishing, vol. 44(4), pages 334-352, November.
    12. Lin, Ruiyue & Liu, Qian, 2021. "Multiplier dynamic data envelopment analysis based on directional distance function: An application to mutual funds," European Journal of Operational Research, Elsevier, vol. 293(3), pages 1043-1057.
    13. Sheng-Hsiung Chiu & Tzu-Yu Lin & Hai-Lan Yang, 2020. "Measuring Energy Performance for Regional Sustainable Development in China: A New Framework based on a Dynamic Two-Stage SBM Approach," Sustainability, MDPI, vol. 12(7), pages 1-15, April.
    14. Nelson Amowine & Zhiqiang Ma & Mingxing Li & Zhixiang Zhou & Benjamin Azembila Asunka & James Amowine, 2019. "Energy Efficiency Improvement Assessment in Africa: An Integrated Dynamic DEA Approach," Energies, MDPI, vol. 12(20), pages 1-17, October.
    15. Suvvari Anandarao & S. Raja Sethu Durai & Phanindra Goyari, 2019. "Efficiency Decomposition in two-stage Data Envelopment Analysis: An application to Life Insurance companies in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(2), pages 271-285, June.
    16. Wanping Yang & Bingyu Zhao & Jinkai Zhao & Zhengda Li, 2019. "An Empirical Study on the Impact of Foreign Strategic Investment on Banking Sustainability in China," Sustainability, MDPI, vol. 11(1), pages 1-15, January.
    17. Abdul Latif Alhassan & Michael Lawer Tetteh, 2017. "Non-Interest Income and Bank Efficiency in Ghana: A Two-Stage DEA Bootstrapping Approach," Journal of African Business, Taylor & Francis Journals, vol. 18(1), pages 124-142, January.
    18. Wang, Wei-Kang & Lu, Wen-Min & Kweh, Qian Long & Lai, Hsiao-Wen, 2014. "Does corporate social responsibility influence the corporate performance of the U.S. telecommunications industry?," Telecommunications Policy, Elsevier, vol. 38(7), pages 580-591.
    19. Huaqing Wu & Jingyu Yang & Wensheng Wu & Ya Chen, 2023. "Interest rate liberalization and bank efficiency: A DEA analysis of Chinese commercial banks," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(2), pages 467-498, June.
    20. Necmi Kemal Avkiran, 2017. "An illustration of multiple-stakeholder perspective using a survey across Australia, China and Japan," Annals of Operations Research, Springer, vol. 248(1), pages 93-121, January.

    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:wly:ijfiec:v:26:y:2021:i:3:p:3352-3376. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Wiley Content Delivery (email available below). General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

    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.