Measuring online stockbroking performance.

Purpose — This paper aims to present a study which uses an innovative two-stage data envelopment analysis (DEA) model that separates efficiency and effectiveness to evaluate the performance of 28 online stockbrokers in Taiwan from 2003 to 2005. Design/methodology/approach — The approach is based on two-stage DEA. Findings — The results show that seven companies are CCR-efficient in their operating efficiency; five companies are CCR-efficient operating effectiveness and only two companies are CCR-efficient both in operating efficiency and effectiveness. There is no apparent correlation between efficiency and effectiveness. Research limitations/implications — This paper presents a two-stage DEA study to investigate the efficiency and effectiveness in the online stockbroking sector. The online stockbroking business is a development from the integration of the internet and the stock trading. As the stock brokerage industry is undergoing a rapid change due to the proliferation of the internet, analyzing the relative efficiency and effectiveness of online stockbrokers is important for management to understand, monitor and sustain performance. Originality/value — The originality of this paper is in the use of a new conceptual framework to assess the performance of online stockbrokers in Taiwan. This study uses the two-stage DEA in conjunction with return on assets ratio, which is widely used in financial analysis, to define and assess performance in the framework. [ABSTRACT FROM AUTHOR]