State-owned shares, government background customer relationship and non-state-owned enterprises’ financing cost

Mengjie Zhao, Guangqian Ren and Junchao Li

Pacific Accounting Review, 2025, vol. 37, issue 3, 370-396

Abstract: Purpose - This paper aims to investigate the alterations in financing cost for non-state-owned enterprises (non-SOEs) subsequent to the introduction of state-owned shares through the lens of ownership structure. It also investigates the role of government background customer relationship as a possible factor that can mediate the relationship between state-owned shares and non-SOEs’ financing cost. Design/methodology/approach - A sample of the Chinese A-shares listed non-SOEs from 2009 to 2022 is used in the study. The study applies multivariate regression analyses to investigate the impact of state-owned shares on non-SOEs’ financing cost. Baron and Kenny’s (1986) three-step model is estimated to test the mediating effect exerted by the government background customer relationship. Findings - The findings indicate that state-owned shares are significantly negatively related to non-SOEs’ financing cost through extending government background customer relationship. In addition, this study finds that green innovation in non-SOEs diminishes this effect. Heterogeneity analyses reveal that the function of state-owned shares is more pronounced when state-owned shareholders are investment-oriented and during periods of heightened economic policy uncertainty. Finally, the results suggest that lower financing costs are shown to enhance enterprise resilience. Originality/value - The authors analyze the possible homogeneous linkage between state-owned capital and the government and explore the possible indirect impact of state-owned shares on the financing cost of non-SOEs from the perspective of government background customers’ procurement demand. The results confirm the theoretical and practical usefulness of state-owned shares and provide new empirical evidence to alleviate the expensive financing of non-SOEs.

Keywords: State-owned shares; Government background customer relationship; Financing cost; Green innovation; Non-state-owned enterprises (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:parpps:par-10-2024-0250

DOI: 10.1108/PAR-10-2024-0250

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