Evaluation on the financial efficiency of listed logistics companies in Malaysia using enhanced data envelopment analysis model with operational risk

Lee, Pei Fun (2023) Evaluation on the financial efficiency of listed logistics companies in Malaysia using enhanced data envelopment analysis model with operational risk. Master dissertation/thesis, UTAR.

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Abstract

Trade facilitation helps to improve the export and import performances which drive the economy of Malaysia. This interconnectedness is achievable with smooth logistics operations for the fulfilment of goods and services in the accurate amount and condition to the proper location at the exact time. Therefore, the logistics industry is a main driver that forms the bridge between the sourcing entity and the consumption point. As such, the financial efficiency of the logistics companies is important to ensure the continuous support to the economy of Malaysia. Data Envelopment Analysis (DEA) is a linear programming model which can be used to optimize the financial efficiency of the listed logistics companies in Malaysia. The efficiency is the ratio of the weighted sum of output to the weighted sum of input and can range from zero to one as the maximum efficiency is one. Logistics companies perform a series of operational activities to move goods and fulfil orders and are prone to operational risk. Therefore, operational risk is an important factor for the evaluation of efficiency of the listed logistics companies in Malaysia. Moreover, no study has measured the efficiency of the listed logistics companies in Malaysia with operational risk in the current DEA model. In view of the research gap, this research intends to propose an enhanced DEA model with iii operational risk to optimize the financial efficiency of the listed logistics companies in Malaysia. The listed logistics companies in Malaysia are assessed and compared between the existing and enhanced DEA models. The results of the enhanced DEA model show that 55.56% of the listed logistics companies are efficient. The efficient and inefficient listed logistics companies have been determined based on the optimal solution of enhanced DEA model. The efficient listed logistics companies are AIRPORT, COMPLET, GDEX, HUBLINE, ILB, MISC, MMCCORP, NATWIDE, POS, PDZ, PRKCORP, SEEHUP, SYSCORP, TNLOGIS and TOCEAN. The range of efficiency of the enhanced DEA model is from 0.6725 to 1.0000 while the average efficiency is 0.9600. This study has also determined the optimal weights of the output and input variables to the maximization of the efficiency of the listed logistics companies with the enhanced DEA model. The operational risk factor, which is the basic indicator approach (

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