Data Envelopment Analysis and Tobit Analysis for Firm Efficiency in Perspective of Working Capital Management in Manufacturing Sector of Pakistan

Ahmad, Muhammad Fawad; Ishtiaq, Muhammad; Hamid, Kashif; Khurram, Muhammad Usman; Nawaz, Ali

doi:10.2139/ssrn.2911577

Cited by 11 publications

(11 citation statements)

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“…First, the firm's efficiency, which is the dependent variable, is calculated. The value of efficiency ranges between 1 and 0 [23]. For the ith firm, Tobit analysis can be explained by the following mathematical expressions:…”

Section: Discussionmentioning

confidence: 99%

Measuring the Technical Efficiency of Certified Organic Rice Producing Farms in Yasothon Province: Northeast Thailand

et al. 2019

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Rice production holds a significant position in the Thai economy. Although it is the world’s largest rice exporter, Thailand’s increase in rice production is the result of an expansion in the cultivation area rather than an increase in yield per unit area. The present study was designed to estimate the technical efficiency and its governing factors for certified organic rice-growing farms in Yasothon Province, Thailand. A data envelopment model was employed to assess the technical efficiency of 328 farmer groups. The data revealed that the average technical efficiency was 23% and 28% under constant returns to scale (CRS) and variable returns to scale (VRS) specifications, respectively. Farmers can reduce the use of machinery, fertilizer, seed, and labor as input factors by about 80.1%, 25.62%, 24.72%, and 19.15%, respectively, while still achieving the same level of output. Multiple regression analysis was applied to estimate factors that affect the pure technical efficiency score (PTES) in the test regions. Results show that household size, farm size, water source, market accessibility, health symptoms, income, and labor were highly related to the TES and the amount of organic rice production. The regression coefficients of the predictors show that the income was the best predictor of the PTES at a significance level of p < 0.05. It is concluded that the farmers can potentially increase their yields by up to 72%–77% under current management practices.

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Section: Discussionmentioning

confidence: 99%

Measuring the Technical Efficiency of Certified Organic Rice Producing Farms in Yasothon Province: Northeast Thailand

et al. 2019

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“…CCC, CCE and NWCL are taken as the explained variables for measuring WCM efficiency of listed manufacturing firms in India. CCC is calculated as addition of receivables days with inventory days and then subtracting payables days from it (Ahmad et al , 2017). CCE is calculated as the ratio of net cash flow from operations to sales (Filbeck and Krueger, 2005).…”

Section: Methodsmentioning

confidence: 99%

Redesigning the efficiency process analysis for working capital models

Seth

Chadha

Sharma

2019

JGOSS

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Purpose The purpose of this study is to get insights into working capital management (WCM) practices and the determinants of its efficiency prevailing in the Indian manufacturing sector using firm-specific as well as macro-economic variables by examining three efficiency models, i.e. cash conversion cycle (CCC), cash conversion efficiency (CCE) and net working capital level (NWCL). Design/methodology/approach The study uses panel data techniques on 1,207 firms of the Indian manufacturing sector, as well as on its nine key manufacturing industries from 2008 to 2018 for the analysis. Findings Several firm-specific variables such as net fixed asset ratio, size of the firm, profitability, firm’s growth, asset turnover ratio, age of the firm, interest rate and leverage have significant effect on WCM efficiency, whereas total assets growth rate, gross domestic product growth rate and inflation rate have insignificant effect on WCM efficiency. Research limitations/implications The study provides new empirical evidence on the short-term liquidity management of manufacturing firms prevailing in the developing countries such as India. The findings are particularly relevant in the present scenario when the liquidity levels are decelerating and there is a marked slowdown in private credit flows to the manufacturing sector due to the problem of burgeoning non-performing assets. Originality/value This study examines WCM efficiency exhaustively by incorporating both firm-specific and macro-economic variables using three efficiency measures, i.e. CCC, CCE and NWCL, results of which emerged as an answer to an efficient WCM.

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“…2 Subsequently, a linear Ordinary-Least-Squares (OLS) regression may lead to invalid results, since “the effect of explanatory variables tends to be non-linear and the variance tends to decrease when the mean gets closer to one of the boundaries” (Buis, 2010). A common practice is to use a Tobit Model as applied, inter alia, in the work of Ahmada, Ishtiaq, Hamid, Khurram, and Nawaz (2017), Spaho (2015), and Standfuss (2013). This regression type enables the limitation of values to an upper and a lower boundary but requires a positive probability for both limitation values.…”

Section: Approach and Methodologymentioning

confidence: 99%

Efficiency losses through fragmentation? Scale effects in European ANS provision

Standfuß

Fichert

Schultz

et al. 2019

Competition and Regulation in Network Industries

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Fragmentation has been suspected of contributing to inefficiencies in the European Air Traffic Management (ATM) system. Heterogeneities between providers may contain multiple aspects, such as airspace structure, staff rostering, or systems used for flow management. Applying the scientific approach of data envelopment analysis, this article provides a new outlook on the relationship between airspace fragmentation and efficiency in the admittedly complex and highly dynamic environment of European ATM. We show that there are airspaces that might benefit from economies of scale, but that there is a tipping point where diseconomies of scale occur. Subsequently, the current approach of functional airspace blocks might inhere inefficiencies for some air navigation service providers.

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Data Envelopment Analysis and Tobit Analysis for Firm Efficiency in Perspective of Working Capital Management in Manufacturing Sector of Pakistan

Cited by 11 publications

References 18 publications

Measuring the Technical Efficiency of Certified Organic Rice Producing Farms in Yasothon Province: Northeast Thailand

Measuring the Technical Efficiency of Certified Organic Rice Producing Farms in Yasothon Province: Northeast Thailand

Redesigning the efficiency process analysis for working capital models

Efficiency losses through fragmentation? Scale effects in European ANS provision

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