A DEA-MALMQUIST Index Application to Analyze Inefficiency Reasons of BIST Corporate Governance Index Companies

Abstract

Corporate governance applications and firms’ ability level in putting these applications taken into considerations have started to be influential in making investment decisions. In addition to financial performances of the firms, corporate governance application levels also getting important day by day. The objective of this study is to determine inefficiency reasons of the firms constituting the Corporate Governance Index of Turkey. To this end, in the first stage of the study, annual data of the 21 companies trading on Borsa Istanbul (BIST) XKURY have been analyzed with Data Envelopment Analysis (DEA). In the second stage, the Malmquist Total Factor Productivity (MTFP) Index of the firms has been calculated. According to the results, none of the index firms in the financial sector was able to show full operational efficiency between 2010 and 2013. Additionally, the findings indicate that the firms were not managed efficiently, operated in unfitting scales and could have produced products with less input. Moreover, this study has revealed that one fourth of the firms experienced technological decline.