Abstract: The mixed ownership reform of state-owned enterprises (SOEs) as the pillar of China’s socialist market economy is an important way to reinforce SOE’s dominant position and to expand and strengthen the state-owned economy. This paper uses the data of state-owned manufacturing enterprises in Chinese Industrial Enterprises Database to build a two-way fixed-effects model to explore whether the mixed-ownership reform of SOEs has improved the level of their profitability, and to test the mechanism. The research results show that the mixed reform of SOEs significantly improves their return on assets. Further study shows that the above effects are achieved mainly through two impact paths: reducing agency costs and decreasing leverage ratios. The heterogeneity analysis at the level of subordination shows that the effect of mixed reform of local SOEs is better than that of central SOEs.

Key words: mixed ownership reform, impact mechanism, corporate performance