Efficiency of listed real estate companies in China based on the two-stage DEA

With the rapid development of the real estate industry in China, a growing number of real estate companies have chosen to be listed on the stock market. In order to assess the ability of raising funds in the market and its impact on the enterprise performance, a real estate company is divided into the operating stage and the financing stage, and both stages are connected in series. This paper aimed to evaluate the operational efficiency and market efficiency of some top-100 companies in 2012 listed in Shanghai and Shenzhen stock market by conducting two-stage DEA. The results show that about 75.9% of the companies involved in evaluation have a high operational efficiency, and only 14.8% of them are performing better in the market. The main reason for the inefficiency comes from the financing stage, and the low market efficiency leads to the inefficiency of the companies. By decomposing the technical efficiency into pure technical and scale efficiency, we found that it is the pure technical efficiency in the financing stage results in the market inefficiency. It comes out that under the current economic condition in China, real estate firms should be make cautious decision regard to financing by listing in the market.