How good was the profitability of British railways, 1870–1912?
AbstractThis 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.
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Bibliographic InfoArticle provided by Economic History Society in its journal The Economic History Review.
Volume (Year): 64 (2011)
Issue (Month): 3 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0013-0117
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Other versions of this item:
- Brian Mitchell & David Chambers & Nicholas Crafts, 2008. "How Good was the Profitability of British Railways, 1870-1912?," The Warwick Economics Research Paper Series (TWERPS) 859, University of Warwick, Department of Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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