Is mixed-ownership a profitable ownership structure?—Empirical evidence from China

Yufei Zhang and Li Wang

Journal of Economics and Business, 2025, vol. 136, issue C, No S0148619525000256

Abstract: Despite nearly twenty years of privatization, mixed-ownership reform has recently been China's mainstay of SOE reform. This raises the question of whether the financial performance of mixed-ownership firms (Mixed firms) is better than that of private-owned enterprises (POEs). Although Mixed firms suffer more from government intervention, unclear property rights, and interest conflicts between state and private shareholders, they can also benefit from the external resources controlled by the state. Therefore, the performance of Mixed firms is still unclear. Collecting data from the Chinese A-share listed market, we divide the firms into POEs, Mixed firms controlled by the state (MixedSOEs), and Mixed firms controlled by the private sectors (MixedPOEs). Measuring profitability using ROA and ROE, we find that POEs perform better than Mixed firms, and MixedPOEs have a higher profitability than MixedSOEs. Better corporate governance is the primary channel that can explain our results. We address the endogeneity challenge in several ways and get similar results. Overall, our analysis provides new evidence on the financial performance of mixed-ownership firms.

Keywords: Ownership structure; Mixed ownership; China economy; Firm performance (search for similar items in EconPapers)
JEL-codes: D21 D23 G32 L25 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:136:y:2025:i:c:s0148619525000256

DOI: 10.1016/j.jeconbus.2025.106257

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