Evaluating Company Efficiency in Malaysian Stock Markets: Insights from DEA and Super Efficiency Models

Roslah Arsad and Zaidi Isa
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Roslah Arsad: Mathematical Sciences Studies, College of Computing, Informatic and Mathematics, Universiti Teknologi MARA (UiTM), Perak Branch, Tapah Campus, 35400 Tapah Road, Perak, Malaysia
Zaidi Isa: School of Mathematical Sciences Studies, Faculty of Science and Technology, Universiti Kebangsaan Malaysia, 43600 UKM Bangi, Selangor, Malaysia

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 4707-4718

Abstract: This study evaluates the financial efficiency of thirty Malaysian companies listed on Bursa Malaysia from 2016 to 2018, using Data Envelopment Analysis (DEA) with the Charnes, Cooper, and Rhodes (CCR) model under constant returns to scale. Efficiency is measured through financial ratios, with return on equity as the output and asset turnover, market capitalization, and debt to equity ratio as inputs. A score of 1 indicates full efficiency, while scores below 1 reflect inefficiency. In 2018, results showed that eight companies (7%) achieved a perfect efficiency score of 1. These companies included DMU2 (Westports Holdings Berhad), DMU3 (AWC Berhad), DMU5 (Cypark Resources Berhad), DMU10 (George Kent (Malaysia) Berhad), DMU11 (AirAsia Group Berhad), DMU15 (UOA Development Berhad), DMU16 (Yinson Holdings Berhad), and DMU17 (RGB International Berhad), making it challenging to identify the top performer. To distinguish the top performers, the Super Efficiency method was applied, revealing DMU15 (UOA Development Berhad) as the most efficient, followed by DMU10 (George Kent (Malaysia) Berhad) and DMU16 (Yinson Holdings Berhad). Similar patterns were observed in 2017 and 2016, with DMU3 (AWC Berhad) consistently emerging as a top performer. The study highlights that using DEA and Super Efficiency methods provides a comprehensive and detailed ranking of company efficiency, offering valuable insights for informed policymaking and investment strategies. The findings underscore the importance of efficiency in driving investor confidence and supporting economic growth.

Date: 2024
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