Access to finance: How does state share participation reduce management costs in private firms?

This paper investigates the effect of state capital participation on management cost in private firms, based on data from China’s A-share listed companies for the period 2007–2023. The results suggest that the presence of state shareholding contributes to reduced management cost. Mechanism analysis indicates that state capital helps ease financial constraints and improves access to informal financing, both of which contribute to lower management cost. These findings remain robust after addressing potential endogeneity bias.