Evaluation of stock market technical efficiency with a comparison of groups of companies in Dhaka Stock Exchange

• Main Authors: Hasan, Md Zobaer, Kamil, Anton Abdulbasah, Baten, Md Azizul
• Format: Article
• Language: English
• Published: Academic Journals 2011
• Subjects: QA Mathematics
• Online Access: http://repo.uum.edu.my/12855/1/1.pdf; http://repo.uum.edu.my/12855/; http://www.academicjournals.org/journal/IJPS/edition/16_October_2011

The objective of this study was to measure stock market efficiency of the groups of companies, such as Group-A (financial), Group-A (non-financial), Group-B and Group-Z of Dhaka stock exchange (DSE) market in Bangladesh applying the Stochastic Frontier approach, incorporating technical inefficiency effect model. Among the four groups, most efficient group was Group-A (financial) and most inefficient group was Group-Z.This study showed that the mean technical efficiency of the companies of DSE market during the period 2000 to 2008 was 0.8782. This implied that 87% of potential output was being realized by the companies of DSE market.In case of using production function model; it was found that the Translog production function was more preferable than the Cobb-Douglas production function. The technical efficiency rate was found gradually increasing over time in the stock market in Bangladesh