The Staggers Act and Firm Performance: Long-Run Evidence

Abstract

The Staggers Act of 1980 was intended to increase the profitability of the railroad industry. The paper examines financial performance from 1963 to 2013 and provides evidence railroads outperformed most other industries from pre- to post–deregulation using accounting-based measures. However, using a market-based measure, the railroad industry underperforms two-thirds of industries. Additionally, the post Staggers accounting performance improvements were not at the expense of firms from commodity groups reliant on rail transportation. Importantly, there exists considerable skewness and heterogeneity across measures, which impacts the effectiveness of inferences based on the mean of the distribution to reflect economic reality.

Keywords: Deregulation and Performance, Financial Performance, Railroad Industry Performance, Staggers Act