Can mixed-ownership reform in state-owned enterprises promote urban green transformation? Evidence from Chinese cities

This study investigates whether mixed-ownership reforms in state-owned enterprises (SOEs) can drive urban green transformation, with a focus on Chinese cities. Addressing the critical gap in existing literature—which prioritizes narrow efficiency metrics over systemic environmental impacts—this study proposed the Ownership Mix-Balance Ratio, defined as the proportional parity between state and non-state shareholders, to evaluate how equity integration resolves the “efficiency-sustainability” paradox. Utilizing a non-radial directional distance function model that incorporates industrial emissions as undesirable outputs, this study analyzed panel data from 284 Chinese cities and listed SOEs (2007–2019). Results demonstrate that a 1-unit increase in Ownership Mix-Balance Ratio enhances urban green total factor productivity (GTFP) by 4.5 %, with stringent media scrutiny and environmental regulation amplifying this effect, reaching up to 18 %, the strongest moderation observed. Three mechanisms underpin this transformation: (1) governance transparency reduces information asymmetry and emission opacity; (2) innovation incentives driven by competitive pressures accelerate green technology adoption; and (3) fiscal resilience reallocates budgets to pollution control investments. Crucially, the reform's impact intensifies under rigorous environmental policies, underscoring the need to integrate ownership restructuring with regulatory frameworks. By redefining Ownership Mix-Balance Ratio as a policy tool for Sustainable Development Goals (SDGs 9 and 11), this study offers actionable insights for China and other emerging economies. Key recommendations include sector-specific Ownership Mix-Balance Ratio thresholds and fiscal mechanisms to channel SOE efficiency gains into renewable infrastructure. • Introduces a novel metric to evaluate state–non-state ownership balance in enterprises. • Measures green productivity using a model that accounts for industrial emissions. • Shows how ownership balance enhances transparency, innovation, and green investment. • Assesses reform effects under varied environmental regulation for robustness. • Provides global policy insights linking ownership reform to sustainability goals.