One novel mixed ownership reform and green innovation in private firms: Evidence from China

A growing body of literature provides evidence that mixed-ownership reform in China greatly affects firm behavior. This study focuses on a novel mixed ownership reform of China's private firms, which we define as “reverse mixed-ownership reform”. We find that firms' green innovation level improves after the reform. Environmental awareness and substantive resources are identified as two underlying mechanisms. These effects are stronger when a firm is in an area with a lower level of market openness and when managerial shareholding is lower. We also find evidence that firms make a trade-off between green innovation and financial performance after the reform.