HOW GOOD WAS THE PROFITABILITY OF BRITISH RAILWAYS, 1870-1912?

Brian Mitchell, David Chambers and Nicholas Crafts

No 269857, Economic Research Papers from University of Warwick - Department of Economics

Abstract: This paper provides new estimates of the return on capital employed (ROCE) for major British railway companies. It shows that ROCE was generally below the cost of capital after the mid-1870s and fell till the turn of the century. Addressing cost inefficiency issues could have restored ROCE to an adequate level in the late 1890s but not in 1910. Declines in ROCE hit share prices and investors made little or no money in real terms after 1897. Optimal portfolio analysis shows that, whilst railway securities were attractive to investors before this date, they would have been justified in rushing to the exits thereafter.

Keywords: Industrial Organization; Production Economics (search for similar items in EconPapers)
Pages: 43
Date: 2009-08-08
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: How good was the profitability of British railways, 1870–1912? (2011)
Working Paper: How Good was the Profitability of British Railways, 1870-1912? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269857

DOI: 10.22004/ag.econ.269857

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