The Relation between Technical Efficiency and Stock Prices: Evidence from the US Airlines Industry (1990-2010)

Posted: 9 Oct 2012

Date Written: April 15, 2012

Abstract

The purpose of this article is to analyse the relation of technical efficiency to stock market prices in the US airlines industry. Technical efficiency is an indicator, dedicated to productivity analysis, taking into account the industry structure. It enables the quantification of gains related to productive competitive advantage. Based on a sample of 28 carriers in the US airlines industry (1990-2010), we provide evidence of a statistical relation between technical efficiency and monthly stock prices. This relation is significant for the two months prior the official disclosure of the technical information. This result indicate that financial information is incrementally subsumed from technical reports. Lastly, based on nonparametric methodological framework, we propose competing modelizations of technical efficiency and we evaluate it in the light of their value relevance.

Keywords: Operating performance, productivity, market valuation, DEA, technical efficiency

Suggested Citation

Belarouci, Matthieu Mehdi, The Relation between Technical Efficiency and Stock Prices: Evidence from the US Airlines Industry (1990-2010) (April 15, 2012). 29th International Conference of the French Finance Association (AFFI) 2012. Available at SSRN: https://ssrn.com/abstract=2083651 or http://dx.doi.org/10.2139/ssrn.2083651

Matthieu Mehdi Belarouci (Contact Author)

affiliation not provided to SSRN ( email )

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