Measuring online stockbroking performance

Abstract

Purpose

This paper aims to present a study which uses an innovative two‐stage data envelopment analysis (DEA) model that separates efficiency and effectiveness to evaluate the performance of 28 online stockbrokers in Taiwan from 2003 to 2005.

Design/methodology/approach

The approach is based on two‐stage DEA.

Findings

The results show that seven companies are CCR‐efficient in their operating efficiency; five companies are CCR‐efficient operating effectiveness and only two companies are CCR‐efficient both in operating efficiency and effectiveness. There is no apparent correlation between efficiency and effectiveness.

Research limitations/implications

This paper presents a two‐stage DEA study to investigate the efficiency and effectiveness in the online stockbroking sector. The online stockbroking business is a development from the integration of the internet and the stock trading. As the stock brokerage industry is undergoing a rapid change due to the proliferation of the internet, analyzing the relative efficiency and effectiveness of online stockbrokers is important for management to understand, monitor and sustain performance.

Originality/value

The originality of this paper is in the use of a new conceptual framework to assess the performance of online stockbrokers in Taiwan. This study uses the two‐stage DEA in conjunction with return on assets ratio, which is widely used in financial analysis, to define and assess performance in the framework.

Citation

Ho, C.B. and Oh, K.B. (2008), "Measuring online stockbroking performance", Industrial Management & Data Systems, Vol. 108 No. 7, pp. 988-1004. https://doi.org/10.1108/02635570810898035