Mixed-Ownership Reform, Tax Incentives, and Leverage of State-Owned Enterprises

• 1、Business School，Ningbo University，Ningbo, Zhejiang 315211

Abstract：Against the backdrop of structural deleveraging, the leverage ratio of state-owned enterprises (SOEs) has been a subject of significant attention. This paper utilizes data from listed SOEs on the Shanghai and Shenzhen stock exchanges from 2013 to 2021 to analyze the relationship between hybrid ownership reform and the leverage ratio of SOEs, as well as the influence of tax incentives on this relationship using a two-way fixed effects model. Theoretical and empirical analysis reveals the following findings: Firstly, there exists a U-shaped relationship between the degree of mix ownership reform and the leverage ratio of SOEs. Secondly, the relationship between mix reform and the long- and short-term leverage ratios of SOEs also demonstrates U-shaped characteristics, but the inflection point appears earlier for the long-term leverage ratio than the short-term leverage ratio. Thirdly, mix ownership reform promotes the adoption of more proactive "debt-reduction by increasing equity" approaches in hybrid reform enterprises. Lastly, tax incentives have a significant moderating effect on the U-shaped relationship between hybrid ownership reform and the leverage ratio of SOEs. Moreover, higher levels of tax incentives shift the inflection point of the U-shaped curve to the left, resulting in a smoother curve. This indicates that higher levels of tax incentives can mitigate the volatility of the leverage ratio of SOEs caused by hybrid ownership reform.

Keywords： Mixed-ownership Reform State-owned enterprises U-shaped relationship Tax incentives