Khar Mang Tan, Fakarudin Kamarudin, Amin Noordin Bany-Ariffin and Norhuda Abdul Rahim
The purpose of this paper is to examine the firm efficiency or technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) in the selected developed and…
Abstract
Purpose
The purpose of this paper is to examine the firm efficiency or technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) in the selected developed and developing Asia-Pacific countries.
Design/methodology/approach
The sample consists of a sum of 700 firms in selected developed and developing Asia-Pacific countries over the period from 2009 to 2015. The non-parametric data envelopment analysis under the production approach is used to investigate firm efficiency.
Findings
On average, this paper discovers that the firms in selected Asia-Pacific countries are moderately efficient. Scale inefficiency (SIE) is found to be the dominant source of firms’ technical inefficiency. The analysis of return to scale shows that the large firms tend to operate at decreasing return to scale level, while the small firms tend to operate at increasing return to scale level.
Practical implications
The findings from this paper provide significant insights to the policy makers and firm managers in promoting the efficient firms of Asia-Pacific countries.
Originality/value
The present paper conducts a critical analysis on return to scale in the firms sector of Asia-Pacific context, which is ignored by the past studies on firm efficiency since the analysis of return to scale is mostly emphasized on banking sector. The precise nature of SIE is important for a firm to be efficient in achieving the firm’s primary goals of profit maximization and sustaining market competitiveness.
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Keywords
Fakarudin Kamarudin, Nazratul Aina Mohamad Anwar, Annuar Md. Nassir, Fadzlan Sufian, Khar Mang Tan and Hafezali Iqbal Hussain
This study aims to examine the impact of country governance and other potential bank-specific characteristics and macroeconomic condition determinants on bank productivity in the…
Abstract
Purpose
This study aims to examine the impact of country governance and other potential bank-specific characteristics and macroeconomic condition determinants on bank productivity in the period of 2006–2016.
Design/methodology/approach
The productivity level of total 167 banks selected from Malaysia, Indonesia, Brunei and Singapore are evaluated using the data envelopment analysis-based Malmquist productivity index method. A panel regression analysis framework based on ordinary least squares, a fixed effect and a random effect models then are used to identify its main determinants.
Findings
The empirical findings indicate that the total factor productivity changes of Islamic banks is higher than conventional banks. The liquidity and global financial crisis influence both banks’ productivity. Bank size, credit risk, market power, management efficiency and inflation merely influence Islamic banks’ productivity. On the country governance dimensions, voice and accountability are found to positively influence both banks’ productivity. Regulatory quality and rule of law (RL) significantly influences the conventional parts. Political stability and absence of violence, government effectiveness, RL and control of corruption negatively influence the banks’ productivity, but this influence is only significant for the Islamic banks.
Originality/value
Country governance has received surprisingly little attention in the banking industry over the past few decades. Majority of the studies that examine the effect of governance on bank performance have focused more on the micro governance dimension. Thus, to the best of the researcher’s knowledge, no study has been done to address the effect of country governance on the productivity of the Islamic and conventional banks.
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Khar Mang Tan, A.N. Bany-Ariffin, Fakarudin Kamarudin and Norhuda Abdul Rahim
The purpose of this paper is to examine the impact of board busyness on firm efficiency in the context of directors’ experience, specifically on directors’ experience that…
Abstract
Purpose
The purpose of this paper is to examine the impact of board busyness on firm efficiency in the context of directors’ experience, specifically on directors’ experience that moderates the impact of board busyness on firm efficiency. Directors’ experience is examined by exploring both depth (board tenure) and breadth (number of former listed directorship) of experience.
Design/methodology/approach
This paper employs data envelopment analysis (DEA) to examine firm efficiency. Then, fixed effect panel regression analysis is applied to test the direct and moderating effect based on a sample of firms in the selected Asia-Pacific countries.
Findings
Significant positive evidence for the moderating effect of directors’ experience on the impact of board busyness on firm efficiency is documented.
Practical implications
Findings are essential for managers, country policymakers and potential investors as inputs to improve the current company practices, laws and policies through the notion that directors’ experience does enable the busy board to contribute to improved firm efficiency.
Originality/value
This paper contributes to the debated perspectives on board busyness by providing initial evidence that directors’ experience positively moderates the impact of board busyness on firm efficiency.
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Khar Mang Tan, Fakarudin Kamarudin, Amin Noordin Bany-Ariffin and Norhuda Abdul Rahim
The purpose of this paper is to enhance the understanding of the long-debated impact of board busyness within a new framework of firm efficiency in the selected developed and…
Abstract
Purpose
The purpose of this paper is to enhance the understanding of the long-debated impact of board busyness within a new framework of firm efficiency in the selected developed and developing Asia–Pacific countries, by assessing the moderation of directors' education towards the relationship between board busyness and firm efficiency. The extant literature on board busyness demonstrates to a lack of clarification of the relationship between board busyness and firm efficiency.
Design/methodology/approach
The sample for this paper comprises a panel data of 800 firms in a cross-country context of the selected developed and developing Asia–Pacific countries during the recent period of 2009–2015. This paper performs a non-parametric Data Envelopment Analysis to measure firm efficiency and panel regression analysis to examine the moderation of directors' education.
Findings
This paper provides support for the busyness hypothesis by documenting that the busy boards are likely to reduce firm efficiency. Moreover, this paper renders support to the upper-echelons theory by demonstrating that the impact of board busyness on firm efficiency is likely to turn positive in the presence of directors' education.
Practical implication
This paper highlights practical implication for managers especially in the Asia–Pacific region who seek to enhance firm efficiency, which is essential for firms in attaining the primary goal of profit maximization.
Originality/value
This paper builds on the extant literature by providing a contemporary research path regarding the moderation of directors' education to explain the long-debated impact of board busyness within a new framework of firm efficiency, based on a recent and significant sample of Asia–Pacific countries.