Financial and Productive Efficiency in Regulated Railway Companies

Almost thirty years ago, in 1991, the European Commission launched a process to reform the railway industry. The main motivation for this reform is the idea that companies in a competitive market will be more interested in optimizing their costs in case of competition on the domestic market from other carriers, which will reduce the burden on the budgets of EU member states. The scientific community has been researching the results and effects of changes in the railway industry for a long time, but most of these studies are aimed at analyzing the dynamics of transport systems efficiency in physical terms. The purpose of this work is to assess the dynamics of productive and financial efficiency of 14 regulated railway companies in Europe on the basis of the most relevant data for the period 2008-2017, which will allow comparing efficiencies estimates obtained for productive efficiency with their monetary values. In addition, this paper examines the existence of a principal-agent problem between management and the state, being the main and often the single shareholder, by assessing the dependence of company efficiency on the amount of state support provided. The results of the analysis confirm and supplement the previous performance evaluations. Also, in terms of financial performance, passenger companies were expected to underperform against holding companies with freight division. In addition, WE countries act as benchmarks for CEE countries, where the reform process is slower. Also, this work did not identify a principal-agent problem, and the results showed that there is a positive correlation between the amount of government support and the efficiency of companies.