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Finance and politics: the wealth effects of special interest group influence during the nationalisation and privatisation of Conrail

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  • James Ang
  • Carol Boyer

Abstract

Conrail, nationalised in 1976 and privatised in 1987, was the most significant nationalisation and privatisation by the US government in recent years. It was created from six bankrupt railroads under the pressure of interest groups, formed by customers, existing claimants, employees and related companies. We document the gains and losses to these special interest groups at key points in the nationalised and privatised time periods. Over this period, the US government had outlays of $6.59 billion, and cash inflow of $6.15 billion, and internal return of - 6.4%. The paper provides evidence that a state-owned firm with good governance could deliver superior performance. Copyright 2007, Oxford University Press.

Suggested Citation

  • James Ang & Carol Boyer, 2007. "Finance and politics: the wealth effects of special interest group influence during the nationalisation and privatisation of Conrail," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(2), pages 193-215, March.
    • Handle: RePEc:oup:cambje:v:31:y:2007:i:2:p:193-215
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    File URL: http://hdl.handle.net/10.1093/cje/bel016
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    Cited by:

    1. Holland, Kateryna, 2019. "Government investment in publicly traded firms," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 319-342.
    2. Chernykh, Lucy, 2011. "Profit or politics? Understanding renationalizations in Russia," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1237-1253.
    3. Feng, Xunan & Johansson , Anders C. & Wang, Ying, 2018. "Strengthened State Capitalism: Nationalized Firms in China," Stockholm School of Economics Asia Working Paper Series 2018-51, Stockholm School of Economics, Stockholm China Economic Research Institute.
    4. James S. Ang & David K. Ding & Tiong Yang Thong, 2013. "Political Connection and Firm Value," Asian Development Review, MIT Press, vol. 30(2), pages 131-166, September.
    5. Liu, Xinghe & Xu, Huifeng & Lu, Meiting, 2021. "Do auditors respond to stringent environmental regulation? Evidence from China’s new environmental protection law," Economic Modelling, Elsevier, vol. 96(C), pages 54-67.
    6. Haoyuan Ding & Yi Li & Liang Wang & Chang Xue, 2022. "The Belt and Road Initiative, political involvement, and China's OFDI," International Studies of Economics, John Wiley & Sons, vol. 17(4), pages 459-483, December.

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