State-owned equity participation and private sector enterprises' strategic risk taking: Evidence from China

Whether state-owned equity participation in private enterprises to implement mixed ownership reform can help the sustainable development of private enterprises has been a widespread topic in recent years. Using data from China's A-share private listed enterprises from 2014 to 2020, this paper adopts the fixed effect model to examine the impact of state-owned equity participation on the strategic risk taking of private enterprises. The study finds that state-owned equity participation can improve private enterprises' strategic risk taking, while alleviating financing constraints and improving corporate governance are important mechanisms. Heterogeneity analysis demonstrates that when enterprises belong to high-tech enterprises and the industry competition is relatively high, state-owned equity participation has a more remarkable effect in promoting strategic risk taking of private enterprises. Further research also finds that state-owned equity participation can improve enterprises' innovation capability, which is embodied in the increase of patent output. This research enriches the relevant achievements of the mixed ownership reform of private enterprises and has certain theoretical and practical guidance for private enterprises' strategic choice.