Stochastic Frontier Analysis of Indonesian Firm Efficiency: A Note

Authors

  • T. Handono E. Prabowo Sanata Dharma University, Indonesia
  • Emilyn Cabanda Regent University, United States

DOI:

https://doi.org/10.32890/ijbf2011.8.2.5

Keywords:

Stochastic Frontier Analysis, Performance measurement, Efficiency, Manufacturing sector, Indonesia Stock Exchange

Abstract

This research attempts to model performance measurement for the firms listed on Indonesia Stock Exchange (IDX) using the stochastic frontier approach. There are 121 firms analyzed over the period of 2000-05 with 726 pooled observations. We also test whether firm’s age, size, market share, manufacturing classifications and time period have effects on the technical inefficiency of the manufacturing sector. Our findings reveal that the average technical efficiency of the tested firms is 0.7149, which is below the efficiency frontier: factors that affect inefficiency are found and explained. Our research has offered notable original contributions to performance measurement and provides insights or managerial decision making on operational performance of listed firms in an increasingly competitive Indonesian economy.

 

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Published

04-06-2011

Issue

Vol. 8 No. 2 (2011): International Journal of Banking and Finance (IJBF) Vol. 8, No.2, 2011

Section

Articles

How to Cite

E. Prabowo, T. H., & Cabanda, E. (2011). Stochastic Frontier Analysis of Indonesian Firm Efficiency: A Note. International Journal of Banking and Finance, 8(2), 74-91. https://doi.org/10.32890/ijbf2011.8.2.5

Research impact

Harvested 2026-09-07
22 citations, from OpenAlex — the highest of the sources checked

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Identifiers DOI 10.32890/ijbf2011.8.2.5 OpenAlex W2185997378