Are state owned enterprises really inefficient? The typical right wing/free market argument, that leads to privatisation of government assets is that the government assets will be far more efficiently managed when in the hands of profit seeking capitalists, rather than being owned by the government. 

Certainly it's fair to say that government departments are inefficient - a department that is directly funded by the government can't go bankrupt, so long as the government keeps funding it. 

However, for a SOE the company still needs to stand on its own right, the SOE doesn't receive funding directly from the government. 

The SOEs management structure is exactly the same as a privately owned company, except that the government is choosing who the board of directors is. 

So the question is, unless the government is electing a board of directors that have different priorities to profit seeking capitalists, how is it that a SOE would be less efficient than a privately owned company?

Is there any research showing that SOEs are less profitable than privately owned companies?
SOE's don't have to perform worse that private enterprises, but they often do.  The reasons are manifold:


Some SOE's are not set up for profit motive, but rather to seed strategic industries for a nation (e.g. Port of Singapore, or Huawei Telecom).
Frequently, state influence at market-oriented is counterproductive because politicians placed in leadership positions are not good business managers (different skillsets), and political contacts can have a detrimental effect on competitiveness (overreliance on government contracts, etc).
Even if the SOE is run by market-selected managers and employees, states often have different shareholder incentives and objectives as owners, so they may not exercise market-driven ownership which leads private firms to attempt maximizing equity value and earnings.


Note that it's not true that SOE's are not funded directly by government.  Many SOE's receive partial funding through government, and many others receive heavily subsidized contracts from governments.

There is quite a lot of research on SOE performance.  Do a search.  For example, McKinsey did a study on Chinese SOE's and concluded that on average they deliver less than half the return on assets as their public counterparts:

http://www.forbes.com/2004/11/04/cx_1104mckinseychina6.html