Operational and investment efficiency of investment trust companies: Do foreign firms outperform domestic firms?
Date
2022-12
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Publisher
Springer Science and Business Media Deutschland GmbH
Abstract
This study examines the efficiency of investment trust companies (ITCs) from 2011 to 2020 using a meta-frontier two-stage network data envelopment analysis (DEA) based on the directional distance function (DDF). We improved the accuracy of the efficiency measurement and added a network-based ranking component to rank the top-performing entities. In the group-specific technology assessment, foreign ITCs excel in investment efficiency. Meanwhile, in the meta-technology assessment, domestic ITCs outperform foreign ITCs in terms of both investment and operational efficiencies. Group-specific technology efficiency scores were found to be lower than or equal to the meta-technology efficiency scores for both the operational and investment stages. Based on the network-based ranking approach, Yuan Ta, a domestic ITC that ranked fourth in the operational stage and first in the investment stage, can be used as a reliable benchmark. This study will enable practitioners to gain a better understanding of the performance of ITCs operating under heterogeneous technologies. © 2022, The Author(s).
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Keywords
Data envelopment analysis, Directional distance function, Investment trust companies, Metafrontier two-stage network, Network-based ranking
Citation
Nourani, M., Kweh, Q. L., Lu, W. -., & Gurrib, I. (2022). Operational and investment efficiency of investment trust companies: Do foreign firms outperform domestic firms? Financial Innovation, 8(1). https://doi.org/10.1186/s40854-022-00382-1