Association between state ownership participation and the performance of private firms: Evidence from China

The mixed ownership reform aims to improve the performance of firms, which is important for optimizing the overall economic layout and promoting firms to sustainable development. Therefore, an important issue is whether state ownership participation in private firms improves their performance in the context of the mixed ownership reform. This study investigates whether and how state ownership participation affects the performance of private firms using Chinese listed private firms from 2010 to 2020. The results of this study indicate that state ownership participation significantly eliminates the performance of private firms. Further results show that there is a U-shaped relationship between the mixed ownership model and the performance of private firms. At the same time, firm transparency and financing constraints play a negative moderating role in the relationship between the mixed ownership model and the performance of private firms. The findings of this study enrich the literature on factors influencing the performance of private firms, provide empirical evidence for mixed ownership reforms in China, and further reveal the characteristics of Chinese accounting practices and the logical rules behind the operation of these practices.