Does Cost Efficiency Lead to Better Financial Performance? A Study on Taiwan International Tourist Hotels

Shieh, Hwai-Shuh

doi:10.1080/10913211.2012.10721889

Cited by 10 publications

(7 citation statements)

References 38 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…A direct positive association between the efficiency and the FP of Tunisian hotels was found by Aissa and Goaied (2016). However, a contradictory argument was presented by Shieh (2012), in a study that used the financial data of 68 Taiwanese hotels; this study found that FP has an insignificant positive relationship with efficiency. Following the direction of the previous literature (Aissa & Goaied, 2016;Barros, 2005;Charnes et al, 1978;Hwang & Chang, 2003;Neves & Lourenço, 2009;Sigala, 2004;M.-M. Yu & Lee, 2009), and using data envelopment analysis (DEA), this study examines the relationship between managerial efficiency and the FP of corporate hotels in Sri Lanka.…”

Section: Efficiencymentioning

confidence: 95%

The Relative Effect of Growth of Economy, Industry Expansion, and Firm-Specific Factors on Corporate Hotel Performance in Sri Lanka

et al. 2020

View full text Add to dashboard Cite

This study evaluates the relative effects of economic growth, industrial expansion, and firm-specific and contextual factors on corporate hotel performance in Sri Lanka. We use data from a sample of 29 listed hotels for 7 years from 2012 to 2018 and employ panel regression to uncover the relationship that exists between these variables. The findings suggest that the macroeconomic factors alone can account for a small part of the variance in return on assets and return on equity, and yet that these macroeconomic factors are the key drivers of the overall financial performance. Moreover, the selected macroeconomic factors, together with firm-specific and contextual factors, appear to have a profound impact on hotel performance. More specifically, growth in the number of tourist arrivals and growth in inflation are found to have a positive and significant impact on corporate hotel performance, while the interest rate has a significantly negative effect. Our findings with regard to the impact of growth in gross domestic product (GDP) on hotel performance are inconclusive. Furthermore, our findings reveal that the profitability of Sri Lankan hotels is driven by managerial efficiency, location factors, geographical diversification, and connection to a wider business network.

show abstract

Section: Efficiencymentioning

confidence: 95%

The Relative Effect of Growth of Economy, Industry Expansion, and Firm-Specific Factors on Corporate Hotel Performance in Sri Lanka

et al. 2020

View full text Add to dashboard Cite

show abstract

“…Moreover, they found that chain systems, tourist guides, and international transportation can significantly improve the cost efficiency of ITHs in Taiwan. Shieh (2012) employed the DEA approach to measure the cost efficiencies of 68 ITHs in Taiwan from 1997 to 2006, and used Tobit regression to investigate the relationship between cost efficiency and financial performance. The financial indicators of the study are the ratio of net operating profit before taxes, ratio of earnings before taxes, and return on asset before taxes.…”

Section: Hotels' Efficiency In Taiwanmentioning

confidence: 99%

An environment-adjusted dynamic efficiency analysis of international tourist hotels in Taiwan

Shieh

Liu

2016

Current Issues in Tourism

Self Cite

View full text Add to dashboard Cite

The paper is the first study to combine four-stage approach and dynamic data envelopment analysis (DEA) to investigate the efficiencies of 45 international tourist hotels in Taiwan during 2002-2011. Using the four-stage approach of Fried et al. [1999. Incorporating the operating environment into a nonparametric measure of technical efficiency. Journal of Productivity Analysis, 12(3), 249-267] and the dynamic DEA model by Tone and Tsutsui [2010. Dynamic DEA: A slacks-based measure approach. Omega, 38 (3), 145-156], the study considers the effects of the external operating environments and carry-over activities between two consecutive terms, and calculates managerial efficiency of international tourism hotels in Taiwan. The empirical results show that dynamic DEA provides more stable pure managerial efficiencies than traditional DEA, reflecting the continuity of the links between terms. Then the study employs Tobit regression to estimate the effects of location, management style, and occupancy rate on input slacks. The location in resort area leads to less slacks of employee and room. The chain system helps reduce slacks in room and area of meal department. The slack of employee and room gets lower while occupancy rate gets higher. After controlling the three external environment variables, the efficiency scores of 28 hotels increase, 9 hotels fall, and other 8 hotels still sustain on the efficient frontier.

show abstract

“…A positive impact of efficiency on profitability was confirmed by Aissa and Goaied (2016), Guillén, Rengifo and Ozsoz (2014), Fageda and Voltes-Dorta (2012), Mostafa (2010) or Greene and Segal (2004), among others. On the contrary, Palečková (2015), Shieh (2012), Keramidou et al (2013) or Olson and Zoubi (2011) identified only a small or no relationship between efficiency and profitability. Despite the existence of many studies focusing on the link between efficiency and profitability, little attention has been paid to this relationship in the tourism sector.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Despite the existence of many studies focusing on the link between efficiency and profitability, little attention has been paid to this relationship in the tourism sector. We have found only two studies that examined hotels (Aissa andGoaied, 2016 andShieh, 2012) and one paper dealing with travel agencies (Sellers-Rubio and Nicolau-Gonzálbez, 2009). Aissa and Goaied (2016) examined 27 hotels operating in Tunisia and used the DEA approach to measure efficiency and the ROA indicator for profitability performance.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Regression results show the significant influence of a hotel's efficiency on its profitability performance. Shieh (2012) employed DEA to estimate the cost efficiency of Taiwan hotels and three financial ratios for profitability performance: the ratio of net operating profit before taxes, the ratio of earnings before taxes, and return on assets before taxes. In contrast to the aforementioned study, Shieh indicated that cost efficiency does not significantly influence profitability performance.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

Hedija

Fiala

Kuncová

2017

Review of Economic Perspectives

View full text Add to dashboard Cite

Abstract:The goal of the paper is to evaluate the economic efficiency of tour operators in the Czech Republic in the period 2007-2014 using data envelopment analysis (DEA) models and prove the link between economic efficiency and profitability and to find out if profitability is a good proxy for economic efficiency. Data was exported from the database Albertina CZ Gold Edition. We calculated the efficiency score using CCR (Charnes, Cooper and Rhodes) and BCC (Banker, Charnes and Cooper) models based on 3 inputs and 1 output. In the years 2007 to 2010, the efficiency score of almost all the companies was higher than 0.5; however, in years since 2011, we revealed significant differences in the efficiency of individual firms and only about 40 percent of tour operators achieved an efficiency score higher than 0.5. Using Pearson and Spearman correlation coefficients, our findings show that, in the case of the Czech tour operator market, profitability ratios do not correspond with firm efficiency. Profitability ratios are not a good proxy for economic efficiency and should not be used as the only firm criterion of performance.

show abstract

Does Cost Efficiency Lead to Better Financial Performance? A Study on Taiwan International Tourist Hotels

Cited by 10 publications

References 38 publications

The Relative Effect of Growth of Economy, Industry Expansion, and Firm-Specific Factors on Corporate Hotel Performance in Sri Lanka

The Relative Effect of Growth of Economy, Industry Expansion, and Firm-Specific Factors on Corporate Hotel Performance in Sri Lanka

An environment-adjusted dynamic efficiency analysis of international tourist hotels in Taiwan

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

Contact Info

Product

Resources

About