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Does mixed-ownership reform improve SOEs' innovation? Evidence from state ownership

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  • Zhang, Xiaoqian
  • Yu, Mingqiang
  • Chen, Gaoquan

Abstract

This paper investigates the impact of the ongoing mixed-ownership reform on the innovation activities of SOEs in China. We find that the reform improves SOE’s innovation, and the impact is heterogeneous, by exploring in different industries and different regions with the influence of macroeconomic environment. This effect is stronger for SOEs in monopoly industries and eastern developed region. As a new form of state-sector reform, this mixed-ownership reform happens not only in SOEs like previous privatization, but also in a reverse direction. We also find its positive impact of improving the innovation for POEs being mix-reformed. To deal with endogeneity concerns, PSM, DiD and IV estimations are used. We also introduce highway as an instrumental variable, All the results in the 2SLS estimations are robust. Additional tests help isolate the effect of intervention from explanations of macro-economic effects, including house price, private employees, credit and equity finance.

Suggested Citation

  • Zhang, Xiaoqian & Yu, Mingqiang & Chen, Gaoquan, 2020. "Does mixed-ownership reform improve SOEs' innovation? Evidence from state ownership," China Economic Review, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x2030047x
    DOI: 10.1016/j.chieco.2020.101450
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    More about this item

    Keywords

    Innovation; Propensity score matching; Difference-in-differences approach; China reform;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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