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Analyzing Performance of Subsidiaries of the Finance Holding Companies
Xiaoning Li
Department of Business Administration Teaching, Business College,
Northwest University of Political Science and Law, China,
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Wen-jie Zou
Institute of Economics of Fujian Normal University
Fuzhou, People’s Republic of China,
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Yung-ho Chiu
Department of Economics, Soochow University,
No. 56, Sec. 1, Kuei-yang, Taipei, Taiwan, ROC.
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Yi-Ting Hong
Department of Economics, Soochow University,
Taipei, Taiwan, ROC.
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Abstract
This study employs the two- stage data envelopment analysis (DEA) proposed by Liang et al. (2008) and the concept of game theory to evaluate the performance of the finance holding companies in Taiwan (hereinafter referred to as the “FHCs”). Meanwhile, it takes into account the role relationship between the leader and the followers and uses the game-theoretic two-stage DEA method to construct a two-stage DEA model of non-cooperative games. The first stage of this study focuses on the operating efficiency; the second stage is to explore the profit efficiency. In order to evaluate the performance of subsidiaries of different industries, each finance holding company (parent company) is regarded as the leader and subsidiaries the followers.
The empirical results show:
1. Analyzing the FHCs including their subsidiaries makes the efficiency evaluation results more objective and comprehensive, and using the two-stage non-cooperative-game DEA method is less likely to overestimate the efficiency value.
2. Most FHCs have poorer performances in marketing efficiency, and better performances in profit efficiency.\
3. In regards to operating efficiency, the FHCs based on banking and securities perform better than others; in regards to profit efficiency, the FHCs based on securities perform better than others. Overall, the FHCs based on banking and securities have the best performance.
Keywords: Financial holding company, Two-stage DEA, Game-DEA model, Efficiency
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