Profitability Performance of Selected Top Listed Malaysian GLCs and non-GLCs

Abstract

The purpose of this study is to measure and compare the profitability performance of selected top-listed Malaysian companies, both government linked and non-government linked companies. A linear programming based methodology, known as data envelopment analysis, DEA is used to measure the relative performance of each company by utilizing a list of normalized performance indicators for the period 2009-2011. In addition to estimating technical and scale efficiency, DEA also provides a mean of measuring returns to scale – increasing, constant and decreasing – and identifying companies exhibiting the most productive scale size, mpss. The DEA scores indicate that only a small number of the companies were operating on the best-practice frontier under the assumptions of constant and variable returns to scale. Comparisons are made between government-linked and non-government linked companies. Most of the companies showed serious scale inefficiency and exhibited decreasing return to scale.