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

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.

Stakeholder-Centered Corporate Governance and Corporate Sustainable Development: Evidence from CSR Practices in the Top Companies by Market Capitalization at Shanghai Stock Exchange of China

“…The potentials of sustainable development, as well as competitiveness of corporations that results in a higher-quality development, has been described in most of the studies of the same interest [55]. There are various parameters through which one can measure higher-quality development and, among them, apart from other parameters, are rate of profit, return on assets (ROA), Tobin Q, earning per share, return on total assets, and asset turnover rates, which can all be used to calculate the efficiency of corporations and their performance [56,57]. The primary purpose behind establishing a firm, and a traditional managerial policy of the majority firms, has been to multiply profits while the balanced-approach organizations will comply stakeholder's preferences in a real-world situation.…”

A dynamic SBM‐DEA and portfolio formation test approach to the operating efficiency‐stock returns nexus

“…The choice of indicators is a prominent aspect of measuring the efficiency of DMUs (Lu et al, 2019; Mantri, 2008). Following extant literature (Atta Mills et al, 2020), this paper models operating efficiency as depending on the following indicators: fixed assets, capital, operating costs, and employee number as input indicators; revenue, gross profit, and return on equity (ROE) as output indicators; and surplus reserve as a desirable carryover indicator. Please refer to Figure 3 for the dynamic operating process used in this study.…”

“…McDonald (2009) suggested that efficiency estimates are fractional data rather than censored data as evidence for the applicability of least squares instead of Tobit regression in determining efficiency drivers. The authors follow McDonald's (2009) and Atta Mills et al's (2020) method to using the least‐squares method and present the model as where denotes the dynamic operating efficiency of company in period represents the regression coefficient, indicates drivers of operating efficiency (independent variables), and is the random error term.…”

“…This growth, as an innovation‐driven mode of economic development, entails optimizing the industrial structure, improving the business environment, and promoting product quality while achieving economic growth. For some time now, investment in China's real estate sector has been on an increasing trajectory (Glaeser et al, 2017) as a result of gradual market liberalization (Liu et al, 2020), urbanization (Hui & Yue, 2006), and government stimulus for the housing sector (Atta Mills et al, 2020).…”

Efisiensi Emiten Properti dan Real estate yang Terdaftar di Indeks Saham Syariah Indonesia Tahun 2016-2020

“…Skor efisiensi teknis digunakan sebagai variabel dependen karena terdiri dari efisiensi teknis murni dan skala efisiensinya. 20 Hal ini mengungkapkan bahwa semua hal dianggap sama, peningkatan atau penurunan leverage oleh perusahaan real estate menyebabkan perubahan efisiensi yang tidak signifikan pada periode penelitian. Namun hasil penelitian ini berbeda dengan peenelitian yang dilakukan oleh Chen dan Li tahun 2017.…”