This paper examines the impact of deregulation on the European transport industry, in the form of privatization, on the managerial efficiency of a panel of deregulated transport companies.
This research examines a dataset of 25 deregulated transport companies from a sample of 12 EU nations from 1988 to 2015. Some studies have analyzed deregulation by using non-parametric models. However, only a limited number of studies focus on the impact of deregulation on the managerial efficiency. This study answers two questions: whether deregulation, in the form of privatization, in the transport sector has any effect on the managerial efficiency, on the profitability and on the investment decisions of the firm, and whether this premise is robust enough across the European transport industry. This study formulates a multivariate regression framework utilizing data from major privatized European transport companies. The final panel includes 25 companies, from 12 EU-MS for the period 1988-2015 equaling 375 firm-year observations based on a rigorous selection methodology.
The study confirms that transport companies, post-privatization, are more efficient regarding operating efficiency and profitability. We find no evidence that deregulation improves investment efficiency.
This study contributes to the transport industry management literature in three ways. Firstly, we update the literature of the economic theory of regulation with an empirical examination which covers the latest years across the EU Member States. Secondly, we introduce a comparison of the effects of deregulation on different components of the managerial efficiency, namely, investment, profitability, and operating efficiency of the incumbents in the EU transport industry. Thirdly, we examined deregulation by using two approaches: a traditional one where deregulation is a dummy variable assessing the overall effect on incumbents’ efficiency performance; a novel approach where the OECD’s deregulation index is used to measure the regulation intensity, accounting also for industry-wide impact assessment. This two-sided approach increases the robustness of the results.
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- Industrial relations
- Managerial efficiency
- Transport industry
- Business, Management and Accounting(all)