Measuring the efficiency of energy distribution firms in the LAC region: a service provision and financial performance approach

This study identifies and analyzes the evolution of efficiency in providing services and the financial performance of LAC electricity distribution companies between 2014 and 2020. Additionally, it examines firms’ characteristics that might be related to efficiency, such as quality of service, corporate governance, firm size, and ownership. We use the nonparametric data envelopment analysis (DEA) approach to capture the efficiency scores. Moreover, we employ different robustness checks, such as the Malmquist index, to calculate the efficiency levels and total factor productivity (TFP) changes and break down the total change. The main results suggest that there is no significant improvement in the levels of efficiency in the period analyzed in the energy distribution firms in the LAC region. When analyzing the heterogeneity of a company’s efficiency, the evidence shows a relationship between companies’ efficiency and the quality perceived by users; higher efficiency is related to better-perceived quality.