State-Owned Capital Participation inPrivate Enterprises: A Perspective ofDebt Financing

He Dexu1,2, Zeng Min2 *, Zhang Shuonan3

1 Business School, University of Chinese Academy of Social Sciences, Beijing, China

2 National Academy of Economic Strategy, Chinese Academy of Social Sciences, Beijing, China

3 School of Finance, Zhejiang University of Finance & Economics, Hangzhou, China

Abstract: This study takes debt financing as the entry point and explores the impactof state-owned capital participation in private enterprises from the perspectives of“unarticulated rules” and “articulated rules”. The study finds that state-owned capitalparticipation significantly reduces the debt financing costs of private enterprises andexpands the scale of their debt financing. This conclusion remains valid after a series ofendogeneity and robustness tests. Further analysis of the mechanism reveals that stateownedcapital participation improves the debt financing of private enterprises throughmultiple channels: Enhancing their social reputation, mitigating the “statistical bias” theyface, optimizing their information quality, and reducing the “shareholder-creditor” agencyproblems. This paper conceptualizes these benefits as the “complementary advantages ofheterogeneous shareholders”. This not only constructs a theoretical framework for “reversemixed-ownership reform” but also better narrates the Chinese story of “mixed-ownershipreform” by adopting a more universally applicable theory of equity structure. Additionally,the paper supplements existing research on the macro- and meso-level relationship betweenthe government and the market by exploring the government’s positive role at the microlevel.

Keywords: Mixed-ownership reform, reverse mixed-ownership reform, state-owned

JEL Classification Code: G32, G38

DOI: 10.19602/j.chinaeconomist.2024.01.02