State-Owned Enterprises across Europe: Stylized Facts from a Large Firm-level Dataset

This paper constructs a firm-level dataset to document the prevalence of State- Owned Enterprises (SOEs) in 27 European countries over the period 2002-2012. We find government ownership of firms to be widespread over the European continent. On average we annually observe 35,596 firms with a state participation; 21,377 of these are majority-owned by the state. Notwithstanding an expected tendency towards concentration in the mining, energy, transport, postal and telecommunication sectors, we do detect non-negligible government ownership in all sectors of the business economy. Countries with a socialist legal origin show the highest number of SOEs and SOEs are present in almost all sectors. Countries with an English legal origin show the lowest numbers of SOEs. Lower levels of economic and financial development, and lower scores on institutional characteristics are associated with higher levels of government ownership at country-level. More collectivist societies also showhigher levels of government ownership. While SOEs are on average larger than privately-owned firms (POEs), half of the SOEs employs less than 50 people. Through a matching exercise we show that SOEs are outperformed by POEs in terms of 16 real and financial firm level indicators.This is no longer the case when SOEs are listed or controlled by a foreign government. In countries with better scores on institutional characteristics SOEs are generally less outperformed by POEs. More collectivist societies are characterised by SOEs that employ more people and pay higher wages, but are less efficient. In terms of employment growth SOEs are outperformed by POEs, but SOEs are more resilient in times of crisis. Further SOEs have a lower propensity to exit which does not seem to vary with the political orientation of the country.