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Leverage, Technical Efficiency and Profitability: an application of DEA to foreign-invested toy manufacturing firms in China

Year: 2007

Type: article

Abstract: Based on a representative sample of the 238 largest foreign-invested toy manufacturing firms in southern China by output value, we adopted a two-stage approach to examine the role of leverage on firm performance as measured by technical efficiency, and the effect of efficiency on profitability. In the first stage, we use data envelopment analysis (DEA) to estimate the technical efficiency of the sample firms. In the second stage, we conduct a regression analysis to study the effects of leverage on efficiency and of efficiency on profitability. Our empirical results support the view that leverage has a positive effect on firm technical efficiency and that there is a positive relationship between technical efficiency and profitability.

Source: Journal of Contemporary China

DOI: 10.1080/10670560701194509

Authors: Vincent Mok, Godfrey Yeung, Zhaozhou Han, Zongzhang Li

Institution: Hong Kong Polytechnic University

Language: English

Topic: Efficiency Analysis Using DEA

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: green

OpenAlex ID: W2135997028

FWCI: 1.315

Cites:

Cited by: 58

Related to: 10