Strengthening the budget supervision functions of the National People’s Congress (NPC) is a crucial aspect of modernizing the national governance system and governance capacity. Against the backdrop of digital transformation, the NPC’s budget networking supervision system offers a feasible solution for enhancing the effectiveness of budget supervision. Currently, the effectiveness of the NPC’s supervision has garnered significant attention from the academic community both domestically and internationally, with relevant research exploring the economic effect of the budget networking supervision reform from dimensions such as fiscal expenditure efficiency and capital allocation efficiency. Will the NPC empower state-owned enterprises (SOEs) and enhance their investment efficiency through the budget network supervision system?

Based on the data of China’s A-share state-owned listed companies from 2008 to 2023, this paper uses a quasi-natural experiment of the reform of the NPC’s budget networking supervision and employs a multi-period DID model to examine the impact of the NPC’s budget networking supervision on the investment efficiency of SOEs. The study finds that the NPC’s budget networking supervision significantly improves the investment efficiency of SOEs, and this positive effect is more pronounced in non-monopoly, risk-preferring, internally well-governed, and over-investing SOEs. Mechanism testing reveals that this effect is mainly achieved through strengthening corporate governance capabilities and optimizing the external investment environment. Economic consequence analysis indicates that the NPC’s budget networking supervision also contributes to improving corporate operational performance, promoting corporate information disclosure, enhancing corporate sustainable development capabilities, and strengthening labor protection.

The marginal contributions of this paper are as follows: First, from the perspective of the NPC’s budget supervision, it expands the research on the microeconomic effect of the reform of budget networking supervision. Second, it reveals the mechanisms through which the NPC’s budget networking supervision affects the investment efficiency of SOEs. Third, it provides a theoretical foundation and empirical support for accelerating the institutional and mechanistic development of the NPC’s budget networking supervision system to optimize the investment efficiency of SOEs.