Technical Efficiency and Stock Market Reaction to Horizontal Mergers

This study examines the relationship between stock market reaction to horizontal merger announcements and technical efficiency levels of the participating firms. The analysis is based on data pertaining to eighty mergers between firms in the U.S. manufacturing industry during the 1990s. We employ Data Envelopment Analysis (DEA) to measure technical efficiency, which capture the firms. competence to produce the maximum output given certain productive resources. Abnormal returns related to the merger announcements provide the investor.s re-evaluation on the future performance of the participating firms. In order to avoid the problem of nonnormality, heteroskedasticity in the regression analysis, bootstrap method is employed for estimations and inferences. We found that there is a significant relationship between technical efficiency and market response. The market apparently welcomes the merger as an arrangement to improve resource utilizations.

Reputation and Efficiency: A Nonparametric Assessment of America's Top-Rated MBA Programs

Widely publicized reports of fresh MBAs getting multiple job offers with six-figure annual salaries leave a long-lasting general impression about the high quality of selected business schools. While such spectacular achievement in job placement rightly deserves recognition, one should not lose sight of the resources expended in order to accomplish this result. In this study, we employ a measure of Pareto-Koopmans global efficiency to evaluate the efficiency levels of the MBA programs in Business Week's top-rated list. We compute input- and output-oriented radial and non-radial efficiency measures for comparison. Among three tier groups, the schools from a higher tier group on average are more efficient than those from lower tiers, although variations in efficiency levels do occur within the same tier, which exist over different measures of efficiency.