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How mixed ownership affects investment efficiency? evidence from state-owned enterprises in China

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  • Xiaoping Huo
  • Yunpei Zhao
  • Zhihao Dong

Abstract

The inefficiency observed in investment within state-owned enterprises presents a significant practical challenge that can affect the sustainable development of China’s economy. To address this issue, this study comprehensively explores the intricate mechanisms underlying the governance implications of mixed ownership on the investment efficiency of listed companies. Drawing on unbalanced panel data encompassing Shanghai and Shenzhen Stock Exchange A-share listed companies in China spanning the period from 2008 to 2022, this study employs a fixed-effects model to unveil the nuanced ways in which mixed ownership influences investment efficiency through the lens of agency costs. This study transcends the boundaries of traditional agency conflicts between managers and shareholders. It delves deeper, illuminating the diverse effects of agency conflicts between significant controlling shareholders and minority shareholders. The results revealed a noteworthy positive correlation between mixed ownership and investment efficiency, and verified the intermediary role of agency costs between mixed ownership and investment efficiency, which is an important result of our research. Heterogeneity analysis indicates that the relationship between the two can be affected by external events, such as during the COVID-19 pandemic, investment efficiency is not the most concerned issue for enterprises. The findings have practical implications for practitioners and policymakers, as they offer avenues for optimizing investment strategies and fostering efficient and effective corporate governance practices.

Suggested Citation

  • Xiaoping Huo & Yunpei Zhao & Zhihao Dong, 2024. "How mixed ownership affects investment efficiency? evidence from state-owned enterprises in China," PLOS ONE, Public Library of Science, vol. 19(6), pages 1-25, June.
    • Handle: RePEc:plo:pone00:0306190
    DOI: 10.1371/journal.pone.0306190
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    References listed on IDEAS

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    1. Huang, Kelly, 2020. "Management forecast errors and corporate investment efficiency," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(3).
    2. Zhang, Weiying, 1997. "Decision rights, residual claim and performance: A theory of how the Chinese state enterprise reform works," China Economic Review, Elsevier, vol. 8(1), pages 67-82.
    3. Syed Ghulam Meran Shah & Mingfeng Tang & Muddassar Sarfraz & Zeeshan Fareed, 2019. "The aftermath of CEO succession via hierarchical jumps on firm performance and agency cost: Evidence from Chinese firms," Applied Economics Letters, Taylor & Francis Journals, vol. 26(21), pages 1744-1748, December.
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    Cited by:

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    2. Raghda Abdellatif Abdelkhalik Elsayed, 2025. "Unveiling the black box: understanding digital assets' complexity," Future Business Journal, Springer, vol. 11(1), pages 1-22, December.

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