The Scale and Financial Performance of State-Owned Enterprises in the CEE Region*

Abstract

The paper aims to analyse state-owned enterprises (SOEs) in 11 post-socialist Central-Eastern European (CEE) countries. Based on the individual data of large non-financial companies, we estimated the real state share in the years 2014 and 2015. We consider both direct and indirect state ownership and apply an explicit classification of companies as majority and minority state-owned, which is neglected in a lot of research. The countries with the highest values of the ‘Country SOE index’ were Slovenia and Latvia, while the lowest were Lithuania and Hungary. State ownership is dominant in transportation and storage and energy supply. The lower return on assets (ROA), return on equity (ROE) and return on capital employed (ROCE) ratios of SOEs imply that capital in this group of companies is used less efficiently. Furthermore, they are characterised by higher wage costs. At the same time, SOEs have higher earnings before interest, taxes, depreciation and amortization (EBITDA) margins and better ability to turn operating revenue into cash than their privately-owned counterparts.