The Cost Efficiency on Listed Chinese Water Company Based on SFA Model

This paper evaluates cost efficiency on listed Chinese water firms from 2010 to 2015 by using the stochastic frontier production analysis. Their accounting data is selected as sample. The finding suggests that the cost efficiency on Chinese water industry is improved from 0.5581 to 0.5790 due to the reform of property rights. Besides, there is still a 35% cost inefficiency among the sample enterprises. Since inefficiency exists, there is an opportunity to improve cost efficiency on Chinese water utilities. In addition, the empirical results explicate that the debt asset ratio, independent director size and per capita GDP will significantly and positively affect cost efficiency. The ratio of state owned assets and market concentration are negatively correlated with cost efficiency.