How Good was the Profitability of British Railways, 1870-1912?

Brian Mitchell, David Chambers and Nicholas Crafts
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Brian Mitchell: Cambridge University
David Chambers: Oxford University

The Warwick Economics Research Paper Series (TWERPS) 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 issues of cost inefficiency could have restored ROCE to an adequate level in the late 1890s but not in 1910. Declines in ROCE hit share prices and returns to shareholders were negative after 1897. Optimal portfolio analysis shows that, whilst railway securities would have had a substantial weight prior to this date, investors would have been justified in rushing to the exits thereafter.

Pages: 44 pages
Date: 2008
New Economics Papers: this item is included in nep-his
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https://warwick.ac.uk/fac/soc/economics/research/w ... /2008/twerp_859a.pdf

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? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:859

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