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Research of FDI and the reduction of the state capital in private firms——Empirical evidence during the crisis period

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  • Gao, Peng
  • Liang, Yating
  • Tan, Yujie
  • Yang, Bo

Abstract

Based on the backdrop of the global financial crisis and trade wars, this study utilizes a sample of Chinese A-share listed private firms from 2008 to 2010 and 2017–2019 to confirm that foreign direct investment (FDI) can lead to a reduction in state-owned capital investment in private firms. Further analysis confirms that FDI improves the business environment and fosters collaboration between private firms and foreign investors, thereby elucidating the relationship between FDI and the ownership structure of private firms. The impact of FDI on reducing state-owned capital is more pronounced in firms without political connections, firms supported by industrial policies, and those with lower overseas revenue or CEOs with an international background. This study focuses on private firms and examines the relationship between private ownership, FDI, and state-owned capital. The findings enhance the understanding of the economic consequences of FDI and corporate equity structure, offering new insights for supporting private firms and boosting regional economic vitality.

Suggested Citation

  • Gao, Peng & Liang, Yating & Tan, Yujie & Yang, Bo, 2025. "Research of FDI and the reduction of the state capital in private firms——Empirical evidence during the crisis period," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925006477
    DOI: 10.1016/j.irfa.2025.104560
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