 Reverse mixed ownership reform: Does state-owned capital injection inhibit corporate leverage manipulation?Ruoyu Zhu, Xiaohui Xin and Kehu Tan Finance Research Letters, 2024, vol. 59, issue C Abstract: Existing studies have focused disproportionately on the impact of mixed ownership reform while ignoring the influence of reverse mixed ownership reform. Considering this, we explore the effects of the latter on corporate leverage manipulation. We find that state-owned capital injection can inhibit corporate leverage manipulation, and the possible mechanisms are the “resources effect” and the “governance effect” inherited from state-owned shares, i.e., state-owned capital participation can restrain corporate leverage manipulation by weakening the induced effect of financing constraints and enhancing the inhibitory effect of corporate governance on firms’ leverage manipulation. Heterogeneity analysis shows that the inhibitory effect of state-owned capital injection on leverage manipulation is more pronounced in firms with state-owned equity shareholdings of no more than 50 % and in capital-intensive industries. Furthermore, state-owned capital injections can significantly reduce firms' bankruptcy risk after curbing corporate leverage manipulation. Keywords: Reverse mixed ownership reform; State-owned capital injection; Leverage manipulation; Financing constrains; Corporate governance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011364 DOI: 10.1016/j.frl.2023.104764 Access Statistics for this article Finance Research Letters is currently edited by R. Gençay More articles in Finance Research Letters from Elsevier |
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