Performance appraisal for the operation and management of listed and OTC Taiwanese companies with DEA benchmarking models

ABSTRACT

Taking listed and Over-The-Counter (OTC) Taiwanese companies in 2008–2010 as samples, this study divides them two groups – crisis companies and normal companies – and employs Data Envelopment Analysis (DEA) benchmarking models to calculate their operation efficiency values respectively. We then examine the relationship between corporate governance and operation performance. We propose a systematic framework of four input variables and two output variables to test and substantiate the performance of these two groups of companies. Our empirical results show the following:

1. Most traditional industries are low-risk and non-crisis, compared with higher risk for high-tech industries; a company whose efficiency value is below 1 should actively improve its operational efficiency.

2. Lower-risk traditional industries imply a higher stockholding ratio of directors along with a lower efficiency value.

3. A negative correlation exists in traditional industries between the stockholding ratio of directors and the possibility of a financial crisis.

KEYWORDS:

• Data envelopment analysis
• benchmarking models
• performance appraisal
• financial crisis
• corporate governance

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Ze-Bin Wang

Ze-Bin Wang is a professor of Business School at Soochow University, China. In 2007, he received his PHD degree in finance from Soochow University, China. His current research interests include enterprise management, risk management, efficiency evaluation and accounting information disclosure of listed companies. He has published more than 40 academic articles or papers in various periodicals in China and international.

Yung-ho Chiu

Yung-ho Chiu is a professor of Department of Economics at Soochow University, Taiwan. In 1994, he received his PhD degree in economics from University of Mississippi, USA. His current research interests include financial management, banking analysis, risk management, China economy research, operations research and green economics. He has published more than 80 academic articles or papers in various periodical.

Jin-chi Hsieh

Jin-chi Hsieh is an associate professor of Department of Business Administration at Taipei City University of Science and Technology, Taiwan. In 1998, he received his PhD degree in chemical engineering from National Taiwan University of Science and Technology, Taiwan. His current research interests include evaluating performance, financial management, strategy management, innovative management, banking analysis, China economy research and green economics.

Ying Li

Ying Li is an associate professor of Business School, Sichuan University, China. She received her PhD in business administration from Sichuan University, China. Her recent research interests include air pollution and its economic impact and social impact, environmental pollution and creativity and so on. She has published about 20 academic articles or papers in Chinese and international journals.

Lee-hui Hsiao

Lee-hui Hsiao works for Taipei Exchange, as the manager of Listing Supervision Department. Following the Government's policy, she has taken the responsibility to promote Taiwan's corporate governance for the past decade. She is also a certified public accountant with a wide range of practical experience. She got her executive MBA degree from Soochow University in 2012.