State-owned capital intervention and tax avoidance by private enterprises in the context of reverse mixed-ownership reform

This study investigates the influence of non-controlling state-owned equity on private enterprises' tax burden in China. Our findings suggest that state capital participation can reduce the tax burden of private enterprises. Specifically, this influence is more potent when the cordial and clean government-business relationship is unbiased, and the tax reduction effect is more pronounced for companies with lower levels of financialization. Further research indicates that state-owned capital can inhibit major shareholders from tunnelling and alleviating inefficient investment by enterprises, resulting in a reduction in the tax burden of private enterprises. This study, based on the background of China's reverse mixed-ownership reform, systematically reveals the governance role of state capital in tax planning within private enterprises. It expands the research on the integration of heterogeneous shareholders and provides a new analytical perspective for evaluating the effectiveness of the two-way mixed-ownership reform policy in emerging markets.