Does State‐Owned Capital Matter for Strategic Change? Evidence From Chinese Private Enterprises

Yuanyuan Yang, Xiaoxia Liu and Qian Sun

International Finance, 2026, vol. 29, issue 1, 149-166

Abstract: State‐owned capital, serving as a stabiliser in economic development, can strengthen risk prevention by taking equity stakes in private enterprises, thereby reducing strategic changes in these firms. This study examines non‐financial listed companies on China's Shanghai and Shenzhen A‐share markets that were privately owned at establishment between 2007 and 2022, to assess the extent and mechanisms by which state‐owned capital equity participation influences strategic change in private enterprises. The findings show that state‐owned capital participation significantly reduces strategic change in private enterprises. Mechanism analysis indicates that this effect occurs mainly through reduced risk‐taking and enhanced external oversight. Further analysis shows that the inhibitory effect of state‐owned capital participation on strategic change is stronger when environmental dynamism is higher, marketisation is greater, and prior performance is better. Additionally, regarding specific dimensions of strategic change, state‐owned capital participation significantly reduces advertising expenditure. This paper contributes to research on the economic consequences of state‐owned capital participation and the factors influencing corporate strategic change. It offers theoretical support and practical guidance for government departments to advance reverse mixed‐ownership reform, enabling different ownership types to learn from each other, promote mutual development, and achieve shared progress.

Date: 2026
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