A Study On The Impact Of Foreign Shareholding On The Financial Performance Of Enterprises

Since the reform and opening up,investment has been exceptionally active and the economy has been prosperous,and the Foreign Investment Law of the People’s Republic of China came into being in 2019.Among the three major industries,the secondary industry is the backbone of social progress,and industry is the top priority.Enterprises are the lifeblood of the country’s economic development,and small and medium-sized enterprises are an important force in the development of our national economy and society.Since the New Crown Pneumonia epidemic,the development of SMEs has also been affected and impacted.How to stabilize the development of SMEs has become a priority for the country,and it is significant to analyze the impact of foreign capital injection and its share on the financial performance of enterprises.In this paper,indicators of a total of 209187 samples of small and medium-sized industrial enterprises from 201 1 to 2013 were selected for analysis,and a mixed panel model and a fixed effects model were applied for comparison,and linear regression analysis,endogeneity test,and robustness test were conducted respectively;heterogeneity analysis was also conducted by type of enterprise holding;quantile regression was also done to determine the specific relationship between the share of foreign ownership and the financial performance of enterprises Finally,the mediating roles of cost margin and export rate in the relationship between foreign ownership and financial performance were explored separately.Through the design of the model and the collation and generalization of the empirical results,the following conclusions can be obtained.Through the empirical analysis,this paper obtains the following conclusions:first,there is an overall negative relationship between the share of foreign ownership and the financial performance of enterprises,and the relationship still holds after passing the endogeneity test and the robustness test;meanwhile,the higher the financial performance of enterprises,the less they are negatively affected by the share of foreign ownership,and the lower the financial performance of enterprises,the more they are negatively affected by the share of foreign ownership.Second,state holding helps to improve the financial performance of enterprises and dilute the negative growth of enterprises’ financial performance caused by the increase of foreign shareholding ratio.Third,cost margin shows a partial mediating effect in the process of foreign ownership share affecting firm’s financial performance,which is negatively related to foreign ownership share and positively related to firm’s financial performance.Fourth,the export rate is one of the mediating ways that foreign ownership ratio is used in the financial performance of enterprises,and it is positively related to foreign ownership ratio and inversely related to the financial performance of enterprises.Based on the findings,this paper proposes the following recommendations for reference:first,consider carefully absorbing foreign capital or foreign investment,especially when the financial performance of the invested enterprise is low,the more careful the decision should be,and at the same time,actively develop and grow the enterprise to resist risks;second,learn advanced management techniques,learn from others and integrate them,and internalize them into an enterprise system suitable for its own development;third,control operating costs to obtain Fourth,control the export rate and develop a strategic plan in line with the development of the enterprise itself.