On Study of the Relationship between TCRI and Technical Inefficiency

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Title:	On Study of the Relationship between TCRI and Technical Inefficiency
Authors:	Hwang, Ruey-ching;Siao, Jhao-siang;Deng, Wen-shuenn
Contributors:	淡江大學統計學系
Keywords:	Discrete ordinal variable;Issuer credit rating;Panel data;Stochastic frontier model;Technical efficiency
Date:	2011-02
Issue Date:	2011-10-23 16:37:53 (UTC+8)
Publisher:	Singapore: International Economics Development and Research Center (IEDRC)
Abstract:	In this paper, a stochastic frontier model with firmspecific technical inefficiency effects in a panel framework (Battese and Coelli, 1995) is used to examine whether a firm with better Taiwan Corporate Credit Risk Index (TCRI) provided by Taiwan Economic Journal attains higher technical efficiency. A special design matrix of discrete ordinal variables is used to study the effects of TCRI on technical inefficiency for firms in Taiwan under the two control variables, firm's age and size. Our empirical result shows that a firm with better TCRI generally has higher technical efficiency. Combining the result with the fact that economic-based efficiency measures are reasonable indicators of the long-term health and prospects of firms (Baek and PagÃ¡n, 2002), we conclude that TCRI is a good credit risk proxy for firms in Taiwan.
Relation:	International Conference on Economics and Finance Research (ICEFR 2011),pp.303-307
Appears in Collections:	[Graduate Institute & Department of Statistics] Proceeding

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