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Managerial psychology and transport firms efficiency: a stochastic frontier analysis

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Abstract

This paper presents an original essay that explains how managerial psychology affects the efficiency of transport firms. Stochastic frontier analysis methods are applied to our sample over a 12-year period from 2000 to 2011, where we aim to detect the potential effect of a well-documented bias in behavioral economic and finance theory: the managerial optimism bias. We initiate a debate concerning the potential role of Chief Executive Officers’ (CEO) irrationalities in explaining the inefficiency of public transport operators, such as the shortfall between the optimal production function and the observed production level. We find strong evidence of the negative impact of CEOs’ optimism bias on transport firms’ technical efficiency, meaning that managerial optimism decreases transport firms’ technical efficiency.

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Notes

  1. It is noteworthy that the gamma value cannot be considered to be a proportion of the variance of the technical inefficiency effects in relation to the total of the variances of the technical inefficiency effects and the random variation (Coelli and Battese 1996).

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Authors and Affiliations

  1. URECA, Faculty of Economics and Management, University of Sfax, Airport Road Km 4, 3018, Sfax, Tunisia

    Sami Jarboui

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  1. Sami Jarboui
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Correspondence to Sami Jarboui.

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Jarboui, S. Managerial psychology and transport firms efficiency: a stochastic frontier analysis. Rev Manag Sci 10, 365–379 (2016). https://doi.org/10.1007/s11846-014-0149-1

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  • DOI: https://doi.org/10.1007/s11846-014-0149-1

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