It remains unclear whether state shareholding (SS) truly enhances firms’ fulfillment of their corporate social responsibility (CSR) or merely motivates them to strategically release “enhanced” CSR reports. Utilizing the reform that permits state–owned equity to participate in privately–owned enterprises (POEs) in China, we find that the participation of SS enhances POEs’ access to resources and alleviates their needs for legitimacy, leading to disparities in CSR disclosure and substantive CSR activities for POEs, consistent with the notion of greenwashing. The greenwashing behavior is particularly pronounced in the presence of large state-owned shareholder and when CSR disclosure is compulsory.

Despite nearly twenty years of privatization, mixed-ownership reform has been the mainstay of SOE reform in China in recent years. This raises the question of whether the financial performance of mixed-ownership firms (Mixed firms) is better than private-owned enterprises (POEs). Although Mixed firms suffer more from government intervention, unclear property rights, and interest conflicts between state shareholders 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 on average, POEs perform better than Mixed firms, and MixedPOEs have a higher profitability than MixedSOEs. Within Mixed firms, more state shares are related to lower profitability, and more private shares are related to higher profitability. Using the NBS survey data, we further find that on average, SOEs exhibit the lowest profitability, with MixedSOEs and MixedPOEs in the middle, and POEs have the highest profitability. We try to 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.

This study documents how the political hierarchy plays a significant role in determining corporate environmental governance. By conducting difference-in-differences analysis to investigate listed firms in China, this study demonstrates that local and central SOEs headquartered in jurisdictions far removed from central government supervision have worse environmental governance than POEs. Verticalization reforms implemented in 2016 enable provincial environmental protection bureaus to direct lower-level bureaus. Local governments cannot control environmental protection bureau leaders for economic development. This study finds that the corporate environmental governance of local SOEs has significantly improved following the reform, as local environmental protection bureaus no longer have conflicts of interest with local governments. However, the reform has not resulted in improvements to corporate environmental governance in central SOEs, whose executives occupy higher status than provincial Environmental Protection Bureau leaders, nor in POEs, which were already managed before the reform. Further evidence indicates that local SOEs experience an increase in abatement investments and relationship building expenses following the reform. Lastly, our study reveals that verticalization reform costs are negligible. Local SOEs have not experienced a decline in financial performance or corporate valuation. This study suggests that policymakers should consider the political ranking of government agencies and enterprises to improve environmental governance.

We examine the effects of China's 2009–2010 stimulus package for innovation differentials between state-owned firms (SOEs) and privately-owned firms (POEs). Using a unique dataset of Chinese manufacturing firms, we find that in the pre-stimulus period SOEs patent at a lower rate than POEs in the least inventive patent category, and at a comparable rate in the more inventive categories. Post-stimulus, SOEs patent at an even lower rate relative to POEs in the least inventive category, but significant, positive SOE-POE patent rate differentials emerge in more inventive patent categories. The stimulus disproportionately benefited SOEs with higher investment subsidies and lower finance costs—institutional support which we find mediates roughly 45 percent of all positive effects of state-ownership for innovation. Institutional support produces larger SOE-POE innovation differentials among firms in strategic sectors and located in high-marketization provinces, and for centrally controlled SOEs.

This paper argues that ffnancial lease, a dominant representation of shadow banking in China, plays a special role in improving the capital allocation efficiency. In a two-sector general equilibrium model with heterogeneous firm, information asymmetry and financial frictions, this paper shows that existence of finance lease market increases aggregate TFP by allowing low productivity SOE firms to lend out and allowing high productivity POE firms to leverage up. Due to the repossession advantage, financial leasing is a “good“ form of shadow banking that does not necessarily cause financial systemic risks.

We investigate the impact of state ownership structure on asset prices and corporate policies. By primarily focusing on China’s corporations, we show that the relationship between expected returns and capital investment varies significantly across state owned enterprises (SOE) and private owned enterprises (POE). A portfolio that longs low investment and shorts high investment firms earns an average annual excess stock return of 5% in the SOE sector. In contrast, there is no relationship between investment and expected returns in the POE sector. We show that the difference in the link between expected returns and investment across SOE and POE firms is driven by their differential exposures to the debt issuance shocks, which captures the monetary supply shocks in China. As SOE firms have easier access to bank loans, the high investment firms in the SOE sector are more able to raise debt despite that debt supply is shrinking, and hence they are less risky. We develop a dynamic model with SOE and POE firms facing different frictions in debt markets. The economic mechanism emphasizes that heterogeneous access to the debt market is an important determinant of equilibrium risk premiums across sectors with different state ownership.