This paper analyzes how privatization can influence the efficiency of a fir
m's operations. Canadian National (CN), a privatized firm, and its closest
private sector competitor, Canadian Pacific (CP), are compared both before
and after the privatization of CN. The total factor productivity of the two
carriers is examined over a 17-year period (1981-1997). Accounting ratios
and stock price returns are compared from 1995 to 1998. The results show th
at although CN was less efficient from 1981 to 1991, its performance increa
sed to surpass that of CP during the post-privatization period. (C) 2001 El
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