Estimating Technical and Scale Efficiency of Malaysian Public Listed Companies: A Non Parametric Approach

The objective of this study is to assess the relative efficiency of fourteen public listed companies in Malaysia. The study is based on the secondary data, gathered from OSIRIS that covers a period of five years, from 2004-2008. This study adopts a nonparametric approach, Data Envelopment Analysis (DEA), using both the constant returns to scale (CRS) and variable returns to scale (VRS) assumptions to provide measures of technical and scale efficiency. The results reveal a substantial level of dispersion of technical efficiency between companies within the sample for the year to year basis. The estimated results show that only 1 company is relatively efficient throughout the period under investigation while the average overall technical efficiency varies from 0.13 to 0.50. We found that the source of inefficiency is majority due to its scale rather than pure technical inefficiency. The inefficient companies can effectively promote resource utilization efficiency by better handling their inputs.