Microeconomic and Macroeconomic Determinants of Efficiency: Evidence from Indian Industrial Machinery Sector

The IUP Journal of Accounting Research & Audit Practices, Vol. XVII, No. 3, July 2018, pp. 39-51

Posted: 28 Nov 2018

See all articles by Dr. Sumit Kumar Maji

Dr. Sumit Kumar Maji

University of Burdwan - Department of Commerce

Date Written: July 19, 2018

Abstract

Industrial machinery industry is one of the most important drivers of growth of the manufacturing sector in the Indian economy. The importance of this industry can be understood from the fact that it produces a wide range of machinery that is at the core of other manufacturing industries in India. Moreover, this sector can contribute towards generating foreign earnings and employment. There are 97 listed companies in this segment, which makes this sector highly competitive. Thus, the firms have to be efficient in order to endure in the long run. The present study seeks to evaluate the efficiency of the 43 (44.33%) select industrial machinery firms for the period 2001-02 to 2014-15 with the help of Stochastic Frontier Analysis in the first stage. In the second stage, the determinants (both microeconomic and macroeconomic) of such firm level efficiency are explored using Panel Censored Tobit Regression Model. The results of the study show that leverage, size, openness, age and inflation are the major determinants of the efficiency of the industrial machinery firms operating in India during the period of study.

Suggested Citation

Maji, Dr. Sumit Kumar, Microeconomic and Macroeconomic Determinants of Efficiency: Evidence from Indian Industrial Machinery Sector (July 19, 2018). The IUP Journal of Accounting Research & Audit Practices, Vol. XVII, No. 3, July 2018, pp. 39-51, Available at SSRN: https://ssrn.com/abstract=3286836

Dr. Sumit Kumar Maji (Contact Author)

University of Burdwan - Department of Commerce ( email )

Department of Commerce
Burdwan-713104
Burdwan, IN West Bengal 713104
India
+919475939809 (Phone)

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