The Effect of Rail Deregulation on the Financial Performance of European Incumbent Operators: A study of EU Railway Liberalization Process Impact

Sammanfattning: EU carries out three deregulation reforms, namely, separating accounting systems for infrastructure and operations, creating independent regulatory institutions and opening access to third parties, to increase the efficiency of European rail industry. We hereby explore its effect on financial performance of European incumbent operators, with the focus on the incumbents’ efficiency as a result of different deregulation scenarios. We find that deregulation deteriorates incumbents’ financial results, except for institutional separation of operation and infrastructure, which can be justified by its immediate offload of balance sheet for operation companies. Our results also suggest that firm characteristics play an important role behind financial performance.