Mixed ownership reform and the short-term debt for long-term investment of non-state-owned enterprises: Evidence from China

In this study, we provide evidence on the effect of introducing state-owned shareholders in non-state-owned enterprises from the perspective of firms' short-term debt for long-term investment. Using Chinese Non-SOEs listed companies from 2010 to 2020 as the sample, we find that the introduction of state-owned shareholders in Non-SOEs significantly promotes the level of short-term debt for long-term investment. We also find the scale of short-term debt, the scale of long-term investment and the quality of internal control play a mediating effect in the relationship between the mixed-ownership reform and the short-term debt for long-term investment. Regional marketization level, economic downcycle, regional banks competition level, the economic policy uncertainty and the firms' market competition power can influence the effect of introducing state-owned shareholders in Non-SOEs. Further, our analysis of the economic consequences of the short-term debt for long-term investment implemented by Non-SOEs demonstrates that it indeed can reduce the cost of debt financing. Overall, the results shed light on the effectiveness of the mixed-ownership reform, and our findings enrich the literature of investment and financing strategy and provides empirical evidence to promote the mixed-ownership reform.