Research On Cost Efficiency Of Listed Companies In Iron And Steel Industry Based On SFA

As the pillar industry in national economy, the iron and steel industry plays anirreplaceable role in the economic construction and social stability. But the ironand steel industry is also criticized for its over-capacity of production and extensiveincrease method. Therefore this paper explores the iron and steel industry from thestandpoint of efficiency, analyzing the change of cost efficiency and regionaldifference in China between2007to2012.Based on the developmental facets of iron and steel industry in China, combinedwith the related researches native and abroad, this paper introduces the costefficiency basic connotation and its importance. With Stochastic FrontierApproach(SFA) and the BC(95)model, the paper evaluates the cost efficiencies ofChinas iron and steel industry listed companies and analyses the key determinants ofcost efficiency. The analysis is applied to a balanced panel of25iron and steelindustry listed companies over the period from2007to2012. At last but not least,the paper discussed the impact factors of the development of Chinas iron and steelindustry.The empirical study shows that, the cost efficiencies of Chinas iron and steelindustry listed companies is low currently, the iron and steel resources are allocatedunreasonably and made use of insufficiency, most of companies stay around theextensive management and have greats pace to improve; the regional developmentof Chinas iron and steel industry is not balanced, there are regional differences incost efficiency, the central and western region is obviously lagging behind; costefficiency have positive correlation with total assets turnover and negativecorrelation with the other five indicators of affecting factor. Based on the empiricalresearch, the cost efficiency of Chinas iron and steel industry can be improved as thefollowing five aspects: pay more attention to cost efficiency in operation activities;increase the scientific research investment to improve the ability of technologicalinnovation; speed up the marketization reform and reduce administrativeintervention; speed up the adjustment of industrial structure; strengthen cooperation with the upstream and downstream industry.