Pakistani Firms' Efficiency: An Empirical Study of Pakistan Stock Exchange through Data Envelopment Analysis

Muhammad Nisar Khan, Adnan Ahmad and Noor Jehan
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Muhammad Nisar Khan: PhD Scholar, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.
Adnan Ahmad: Assistant Professor, IBL, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.

Global Social Sciences Review, 2018, vol. 3, issue 3, 158-174

Abstract: This paper investigates listed firm efficiency on Pakistan Stock Exchange by using Data Envelopment Analysis (DEA). The reason for application and calculation of the DEA score is to know how much the firms are efficient in utilizing their resources to be converted into output (sales/Net Income). An optimization technique (DEA) that helps calculate efficiencies of firm’s decision making Units (DMU’s) by taking different inputs and outputs variables. This paper uses DEA in measuring efficiency of 136 Pakistani firms listed on Pakistan Stock Exchange (PSX). Using secondary data set of 136 firms for the period 2008-2017, efficiency measurements are calculated by using financial ratios and financial indicators as input and output variables. Results show that some of the firms are efficient in utilizing their available resources in an efficient way to convert it into output, while some are inconsistent in efficiently utilizing their resources (inputs) to get the desired outputs.

Keywords: Data Envelopment Analysis; Overall Technical Efficiency; NonFinancial Sectors; Pakistan Stock Exchange (PSX) (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:gss:journl:v:3:y:2018:i:3:p:158-174

DOI: 10.31703/gssr.2018(III-III).10

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