Open Access Subscription Access
Open Access Subscription Access
An Empirical Study on Risk-Return Analysis to Compute Efficiency of Indian Cement Companies During Pre- and Post-Recession Periods
The study aims at computing the efficiency of the cement companies in Indian scenario during the Pre- and Post period of recession by utilising Data Envelopment analysis. Linear program has been formulated by taking Risk (namely financial risk and business Risk) as inputs and Return (namely return on equity and return on assets) as outputs during the Pre- and Post- period of recession. The cement companies have been ranked according to their efficiency scores computed through the linear program. A further endeavour has been made in this paper to investigate whether the risk (namely financial risk or business risk) is having any impact on the efficiency score of the cement companies during the Pre and Post recession period by utilising multiple regression analysis. The study has also utilised the Spearman rank correlation to investigate if there is a significant difference between the ranks obtained by the cement companies during the pre and post period of recession. It is a very unique work in itself where the relationship between the risk and return has been explored to compute the efficiency score and to investigate whether risk is having any impact on the efficiency scores of the cement companies.
Risk, Return, Data Envelopment Analysis, Efficiency, Cement, India.
JEL Classification: C61, C67.
- Alipour, D. M., Kord, B., & Tofighi, E. (2011). A study of different types of business risks and their effects on banks’ outsourcing process (Case Study: Tejarat bank in Iran). International Journal of Business and Social Science, 2(12).
- Anderson, P., & Peterson, N. C. (1993). A procedure for ranking efficient units in data envelopment analysis. Management Science, 39(10), 1261-1264.
- Anthony, P., Behnoee, B., Hassanpour, M., & Pamucar, D. (2019). Financial performance evaluation of seven Indian chemical companies. Decision Making: Applications in Management and Engineering, 2(2), 81-99.
- Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9), 1078 - 10.
- Bodla, B. S. (2013) Financial risk management in india-evidence from literature review. SDIMT Management Review, I(I), 7-15.
- Bowlin, W. F. (1998). Measuring performance: An introduction to data envelopment analysis (DEA). The Journal of Cost Analysis, 15(2), 3-27.
- Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision-making units. European Journal of Operational Research, 2(6), 429-444.
- Feruś, A. (2014). The application of data envelopment analysis method in managing companies’ credit risk. Business and Economic Horizons, 10(1), 60-69.
- Golany, B., & Roll, Y. (1989). An application procedure for DEA. Omega, 17(3), 237-250.
- Hemrit, W., & Arab, M. B. (2012). The major sources of operational risk and the potential benefits of its management. The Journal of Operational Risk, 7(3), 71-92.
- Kohl, S., Schoenfelder, J., Fügener, A., & Brunner, J. O. (2019). The use of Data envelopment analysis (DEA) in healthcare with a focus on hospitals. Health Care Management Science, 22(2), 245-286.
- Mahotra, D. K., & Malhotra, R. (2008). Analyzing financial statements using data envelopment analysis. Com. Lending Rev., 23-25.
- Narayanaswamy, T., & Muthulakshmi, A. P. (2014). Efficiency of private sector banks in India. Indian Journal of Finance, 8(10), 33-47.
- Ozturk, M. B., Sahin, E. E., & Aktan, C. (2016). Relationship between financial risk and business risk with firm values in the logistics industry: An analysis on Brics-T countries. Uluslararası Yönetim İktisat ve İşletme Dergisi, 30, 532-547.
- Siew, L. W., Fai, L. K., & Hoe, L. W. (2018). Investigation on the efficiency of financial companies in Malaysia with data envelopment analysis model. In J. Phys. Conf. Ser., 995, No. 1.
- Sin, J. H. (2019). A study on the financial efficiency analysis method by redesigning the DEA model. OPSEARCH, 57, 1-17.
- Subramanyam, T., & Reddy, C. S. (2008). Measuring the risk efficiency in Indian commercial banking - A DEA approach. East-West Journal of Economics and Business, 11(1 & 2), 76-105.
Abstract Views: 147
PDF Views: 1