IDEAS home Printed from https://ideas.repec.org/a/ibf/gjbres/v3y2009i1p133-145.html
   My bibliography  Save this article

Survival-Ability Of Firm: Empirical Evidence From Malaysia

Author

Listed:
  • Rosita Chong
  • Raihana Firdaus Seah Abdullah
  • Alex Anderson

Abstract

Malaysia like many other Asian countries was affected by the 1997 Financial Crisis. During this Financial Crisis, many companies succumbed. Pomerleano (1998) found that leverage of the companies if unchecked can be detrimental to the health of the company. He concluded that excess leverage at the micro level and also poor profitability resulted in the 1997 East Asian crisis. The aim of this study is to analyze the survival-ability of a sample of Malaysian public listed companies (PLCs) by analyzing the impact of financing decision of the sample firms. Both financing and operating leverage, along with the performance of the companies is evaluated. This study adopts a non-parametric approach to measure the company’s survival-ability in terms of their financing decision for their production process. In order to achieve this main objective, the study attempts (i) to identify, using Data Envelopment Analysis (DEA), the survivors among the PLCs based on their financing decisions and (ii) to analyze the effects of leverage on the survival of the PLCs. This article contributes to current literature in two areas, namely; the evaluation of the survival-ability of the PLCs via their financing decisions. Secondly, the use of financial and operating liability leverage in evaluating survival-ability of the companies.

Suggested Citation

  • Rosita Chong & Raihana Firdaus Seah Abdullah & Alex Anderson, 2009. "Survival-Ability Of Firm: Empirical Evidence From Malaysia," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 3(1), pages 133-145.
    • Handle: RePEc:ibf:gjbres:v:3:y:2009:i:1:p:133-145
    as

    Download full text from publisher

    File URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v3n1-2009/GJBR-V3N1-2009-12.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. E H Feroz & S Kim & R L Raab, 2003. "Financial statement analysis: A data envelopment analysis approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(1), pages 48-58, January.
    2. B. Hollingsworth & P. Smith, 2003. "Use of ratios in data envelopment analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 10(11), pages 733-735.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. Bain, Joe S, 1969. "Survival-Ability as a Test of Efficiency," American Economic Review, American Economic Association, vol. 59(2), pages 99-104, May.
    5. Smith, P, 1990. "Data envelopment analysis applied to financial statements," Omega, Elsevier, vol. 18(2), pages 131-138.
    6. Ehsan H. Feroz & Raymond Raab & Stephen Haag, 2001. "An Income Efficiency Model Approach to the Economic Consequences of Osha Cotton Dust Regulation," Australian Journal of Management, Australian School of Business, vol. 26(1), pages 69-89, June.
    7. Zhu, Joe, 2000. "Multi-factor performance measure model with an application to Fortune 500 companies," European Journal of Operational Research, Elsevier, vol. 123(1), pages 105-124, May.
    8. Zhu, Joe, 1996. "Robustness of the efficient DMUs in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 90(3), pages 451-460, May.
    9. Chen, Yao, 2005. "Measuring super-efficiency in DEA in the presence of infeasibility," European Journal of Operational Research, Elsevier, vol. 161(2), pages 545-551, March.
    10. Bowlin, William F., 1999. "An analysis of the financial performance of defense business segments using data envelopment analysis," Journal of Accounting and Public Policy, Elsevier, vol. 18(4-5), pages 287-310.
    11. Zhu, Joe, 1998. "Data envelopment analysis vs. principal component analysis: An illustrative study of economic performance of Chinese cities," European Journal of Operational Research, Elsevier, vol. 111(1), pages 50-61, November.
    12. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    13. Zhu, Joe, 2001. "Super-efficiency and DEA sensitivity analysis," European Journal of Operational Research, Elsevier, vol. 129(2), pages 443-455, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yin, Hongying & Jin, Xin & Quan, Xiaofeng & Yu, Junli, 2022. "Does social network improve corporate financing efficiency? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hahn, G.J. & Brandenburg, M. & Becker, J., 2021. "Valuing supply chain performance within and across manufacturing industries: A DEA-based approach," International Journal of Production Economics, Elsevier, vol. 240(C).
    2. Ioannis E. Tsolas, 2020. "Financial Performance Assessment of Construction Firms by Means of RAM-Based Composite Indicators," Mathematics, MDPI, vol. 8(8), pages 1-16, August.
    3. Ya Chen & Yongjun Li & Liang Liang & Huaqing Wu, 2019. "An extension on super slacks-based measure DEA approach," Annals of Operations Research, Springer, vol. 278(1), pages 101-121, July.
    4. Rezaeiani, M.J. & Foroughi, A.A., 2018. "Ranking efficient decision making units in data envelopment analysis based on reference frontier share," European Journal of Operational Research, Elsevier, vol. 264(2), pages 665-674.
    5. Fernández, David & Pozo, Carlos & Folgado, Rubén & Jiménez, Laureano & Guillén-Gosálbez, Gonzalo, 2018. "Productivity and energy efficiency assessment of existing industrial gases facilities via data envelopment analysis and the Malmquist index," Applied Energy, Elsevier, vol. 212(C), pages 1563-1577.
    6. Wai‐Peng Wong & Qiang Deng & Ming-Lang Tseng & Loo‐Hay Lee & Chee‐Wooi Hooy, 2014. "A Stochastic Setting To Bank Financial Performance For Refining Efficiency Estimates," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 21(4), pages 225-245, October.
    7. Cheng, Gang & Qian, Zhenhua & Zervopoulos, Panagiotis, 2011. "Overcoming the infeasibility of super-efficiency DEA model: a model with generalized orientation," MPRA Paper 31991, University Library of Munich, Germany.
    8. Premachandra, I. M., 2001. "A note on DEA vs principal component analysis: An improvement to Joe Zhu's approach," European Journal of Operational Research, Elsevier, vol. 132(3), pages 553-560, August.
    9. Azadeh, A. & Amalnick, M.S. & Ghaderi, S.F. & Asadzadeh, S.M., 2007. "An integrated DEA PCA numerical taxonomy approach for energy efficiency assessment and consumption optimization in energy intensive manufacturing sectors," Energy Policy, Elsevier, vol. 35(7), pages 3792-3806, July.
    10. Emrouznejad, Ali & Rostami-Tabar, Bahman & Petridis, Konstantinos, 2016. "A novel ranking procedure for forecasting approaches using Data Envelopment Analysis," Technological Forecasting and Social Change, Elsevier, vol. 111(C), pages 235-243.
    11. K Kerstens & I Van de Woestyne, 2011. "Negative data in DEA: a simple proportional distance function approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(7), pages 1413-1419, July.
    12. Liu, W.B. & Zhang, D.Q. & Meng, W. & Li, X.X. & Xu, F., 2011. "A study of DEA models without explicit inputs," Omega, Elsevier, vol. 39(5), pages 472-480, October.
    13. Muhammad Nisar Khan & Adnan Ahmad & Noor Jehan, 2018. "Pakistani Firms' Efficiency: An Empirical Study of Pakistan Stock Exchange through Data Envelopment Analysis," Global Social Sciences Review, Humanity Only, vol. 3(3), pages 158-174, September.
    14. Constantino J. Garcia Martin & Amparo Medal-Bartual & Marta Peris-Ortiz, 2014. "Analysis of efficiency and profitability of franchise services," The Service Industries Journal, Taylor & Francis Journals, vol. 34(9-10), pages 796-810, July.
    15. Kuo‐Cheng Kuo & Wen‐Min Lu & Thanh Nhan Dinh, 2020. "Firm performance and ownership structure: Dynamic network data envelopment analysis approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 608-623, June.
    16. Saranga, Haritha, 2009. "The Indian auto component industry - Estimation of operational efficiency and its determinants using DEA," European Journal of Operational Research, Elsevier, vol. 196(2), pages 707-718, July.
    17. Dimitrios Giokas & Nicolaos Eriotis & Ioannis Dokas, 2015. "Efficiency and productivity of the food and beverage listed firms in the pre-recession and recessionary periods in Greece," Applied Economics, Taylor & Francis Journals, vol. 47(19), pages 1927-1941, April.
    18. Liu, John S. & Lu, Louis Y.Y. & Lu, Wen-Min, 2016. "Research fronts in data envelopment analysis," Omega, Elsevier, vol. 58(C), pages 33-45.
    19. Li Sun & Marty Stuebs, 2013. "Corporate Social Responsibility and Firm Productivity: Evidence from the Chemical Industry in the United States," Journal of Business Ethics, Springer, vol. 118(2), pages 251-263, December.
    20. Cook, Wade D. & Seiford, Larry M., 2009. "Data envelopment analysis (DEA) - Thirty years on," European Journal of Operational Research, Elsevier, vol. 192(1), pages 1-17, January.

    More about this item

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibf:gjbres:v:3:y:2009:i:1:p:133-145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mercedes Jalbert (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.