How does state-owned capital participation suppress excess goodwill in private enterprises?

This paper uses data on Chinese A-share private listed companies from 2007 to 2023 to examine how state-owned capital participation in “reverse mixed-ownership reform” affects excess goodwill, from both the perspective of “articulated rules” and “unarticulated rules.” The empirical results show that state-owned capital participation significantly curbs excess goodwill in private enterprises, and this finding remains robust after a series of endogeneity and robustness checks. Mechanism tests suggest that the effect operates mainly through strengthened governance and information channels. Further analysis indicates that the inhibitory effect is more pronounced when industrial state-owned capital participates, and state-owned capital participation also significantly alleviates the risk of subsequent goodwill impairment. This paper develops a theoretical framework linking state-owned capital participation to excess goodwill in private enterprises, sheds light on the institutional logic underlying China’s “mixed-ownership reform,” and tells a Chinese story of complementary advantages among heterogeneous shareholders.