Common Shareholders Along the Supply Chain and Suppliers’ Working Capital Management: Evidence from China

Using a sample of Chinese non-financial A-share listed companies from 2007 to 2023, this study investigates how common shareholders along the supply chain (CSSC) influence suppliers’ working capital management. The empirical results show that CSSC significantly reduce suppliers’ capital tied up in inventory and accounts receivable. Mechanism tests indicate that CSSC enhance working capital management mainly by improving supply–demand matching accuracy and customer relationship stability. Heterogeneity analyses show that the effect is more pronounced in periods of high economic policy uncertainty, among suppliers with weaker internal controls, and among non-state-owned enterprises. Moreover, the effects are mainly concentrated among controlling, institutional, and strategic CSSC. The economic consequences analysis indicates that improvements in suppliers’ working capital management are associated with higher supply chain value. Overall, this study extends research on common ownership and working capital management by showing how vertical equity linkages in supply chains can serve as a governance and coordination mechanism.