A comparison of state-owned enterprises and private companies

Worldwide we see trends of privatization and nationalization. It is questionable which type of ownership results in better financial performance of a firm. In this study, I examine the differences in performance between state-owned enterprises and private companies in the Netherlands. Financial performance is measured using profits and volatility of profits. I use a propensity score method to match public firms with private firms, using multiple matching algorithms, and to measure the average treatment effect on the treated. The results suggest that state-owned companies do not perform worse than private companies in terms of profitability, however, state-owned companies do perform worse in terms of the volatility of profits.