It has been stated that the meaning of higher efficiency is equivalent to being more competitive and profitable for enterprise operations. Using insights from fundamental analysis, the purpose of this study is to investigate the relative operational performance and market efficiency of liner shipping firms. The paper applies Data Envelopment Analysis (DEA) to calculate an efficient frontier that corresponds to the optimal relationship between financial data and market value. Stocks at the frontier are optimally priced in the market. Stocks falling behind the frontier are valued less favorably. The models developed incorporate inputs and outputs related to operating performance and market efficiency consistent with the prior financial accounting literature. Our sample consists of 18 major (leading) international liner shipping firms that have been found to exhibit average market efficiency and a high degree of operational performance.
Good News for Value Stocks: Further Evidence on Market Efficiency