Share prices : critical perspective of the greater fool theory / Merwe Oberholzer

Abstract

Where the results of a DEA model, which aggregates operating, profitability and marketability efficiencies, are compared to profitability and market value ratios, Annual financial statement data were used for 55 manufacturing companies listed on the JSE Limited over a five-year The purpose of the study is twofold, namely to firstly use Data Envelopment Analysis (DEA) to aggregate the overall performance (technical efficiency) of firms to convert scares resources into outputs that create shareholders' wealth in a single measurement, and secondly, to determine the degree to which this mentioned performance is reflected in a number of profitability and market value ratios, The value of the study is that it is the first study period in a cross-sectional analysis, The study found that return on equity has the most significant relationship with technical efficiency, followed by return on assets, and to a lesser extent, price/net asset value and price/book value, The market value ratios, i.e., price/earnings, dividend yield and price/cash flow, have a very weak relationship with technical efficiency, Further research is needed and a more advanced DEA analysis should be considered to accommodate measures such as scale, AL locative and economic efficiencies Keywords: Data Envelopment Analysis, input-orientated, market value ratios, profitability Ratios, technical efficiency, variable returns to scale