Non-controlling State-owned Equity Participation and Corporate Financing Constraints: Effection and Mechanism

  • Ning Xu

Abstract

We use the multiple period DID method to research the effect and mechanism of state - owned capital equity participation in private enterprises on its financing constraints in China. The study found that state-owned equity participation significantly reduced the financing constraints of the private companies. This conclusion is still valid after the robust test and PSM method are used to control possible endogenous problems. In addition, we also conducted group inspection according to the corporate's control right concentration level and the headquarters' economic development level, the results show that the role of state-owned equity participation is more significant in enterprises with higher actual controller control rights and in underdeveloped regions. The mediation effect analysis shows that: state-owned equity participation does not significantly increase operating income growth, but equity participation reduces the financing constraints of enterprises by reducing agency costs. The findings of this article further expand the research framework of corporate governance in developing economies, and also have some inspiration for a deep understanding of the economic effects of state-owned equity participation and the ongoing state-owned enterprise mix-ownership reforms.

Published
2020-12-01
How to Cite
Ning Xu. (2020). Non-controlling State-owned Equity Participation and Corporate Financing Constraints: Effection and Mechanism. Design Engineering, 801 - 821. https://doi.org/10.17762/de.vi.1122
Section
Articles