Mixed Ownership Reform And OFDI Risk-Taking

The report of the 19 th National Congress of the Communist Party of China clearly states that the goal of the next stage of China’s economic development is to form a high-quality and cost-effective growth model,which puts forward new requirements for the development of Chinese enterprises.As part of the core economic system with public ownership as its main body,state-owned enterprises,as the major force in China’s internal economy,their economic development is linked not only to the life-blood of the nation’s economy,but will also provide guidance for the economic decision-making of the majority of small and medium private firms.However,because of its inherent political characteristics,China’s state-owned enterprises typically face issues such as severe government intervention and owner-occupancy.The topic of mixed ownership reform has received increasing attention as a good recipe for improving the efficiency of state enterprises’ operations and for promoting China’s economic transformation and development.The report of the 19 th National Congress of the Communist Party of China clearly states that the goal of the next stage of China’s economic development is to form a high-quality and cost-effective growth model,which puts forward new requirements for the development of Chinese enterprises.Due to the impact of COVID-19 on the world economy,uncertainty caused by the international environment has increased rapidly.As the main body of China’s foreign direct investment activities,the performance of state-owned enterprises with regard to transnational investments is of crucial importance.Consequently,in the face of the ever-increasing booming cross-border investment,can mixed ownership reform promote improvements in the risk-bearing capacity of state enterprises in foreign direct investment,and achieve the domestic demands of "cultivating world-class enterprises" ?What is its mechanism of action in this case? These questions warrant further investigation.Based on the above considerations,this article,drawing on existing research,selects publicly listed Chinese A-share firms from 2003 to 2021 as the focus of this study,and uses propensity score matching and two-difference regression at multiple time points to test the impact of the mixed ownership reform of state enterprises on the bearing of firms’ foreign direct investment risk.The intermediate effect model is also used to analyze and test the indirect mechanism of mixed ownership reform affecting the bearing of foreign direct investment by state-owned firms on risk through the two channels of total factor productivity and the quality of internal monitoring by private firms.In addition,in order for the research in this article to be more focused and informative,as described in the heterogeneity analysis section,state firms are pooled and regressed on the criteria of the organizational style of the state firm,depending on the nature of the industry in which the state-owned enterprise is located,and the region in which the state-owned enterprise is located,in order to further explore differences in the impact of mixed ownership reform on the bearing of foreign direct investment by state-owned enterprises at different political levels,belonging to different kinds of industry,and located in different regions.The main conclusions of this paper are as follows: mixed ownership reform can significantly improve soes’ OFDI risk bearing capacity;The empirical study on the intermediate variables shows that the mixed ownership reform improves the risk bearing capacity of enterprises in FDI activities by improving the total factor productivity of soes and strengthening the quality of internal control of soes.In the heterogeneity test,the types of state-owned enterprises in which the mixed reform plays a more significant role in improving the risk bearing ability of enterprises in FDI are local state-owned enterprises,state-owned enterprises in competitive industries,and state-owned enterprises in central and western regions.