With the acceleration of population aging, to ensure the balance of payments of the basic pension insurance fund for urban employees, the Chinese government implemented a policy in 2020 to transfer 10% of state-owned equity to supplement social security funds, and its effectiveness depends on the business performance of enterprises.

Based on data from listed companies, this paper takes state-owned enterprises (SOEs) as the treatment group and non-state-owned enterprises (non-SOEs) as the control group, and uses the DID method to evaluate the effect of the equity transfer policy. The study finds that the policy effectively improves the quality of internal control in SOEs, which is reflected in the alleviation of over-investment and the improvement of production efficiency, thus enhancing the business performance of SOEs. This policy effect exhibits strong heterogeneity. When a higher-level organization supervises a lower-level one, the supervision effect is better due to stronger binding force. Therefore, in the groups where the level of SOEs is lower than that of asset-receiving institutions, the effect of performance improvement is more significant. In the group where general managers do not hold shares, the more severe the principal-agent problem, the greater the performance improvement after the implementation of the policy. The lower the existing internal governance quality of an enterprise, the more pronounced the policy effect.

The contributions are mainly reflected in two aspects: First, SOEs are the main targets of the policy, but few studies have explored the impact of the policy on enterprises. This paper fills this gap. Second, this paper also enriches the literature on how reforms in the field of social security affect enterprises.

This paper also has certain policy implications. To give full play to the supervisory functions of asset-receiving institutions over central and provincial SOEs, reforms can be considered in two aspects in the future: First, asset-receiving institutions may consider deploying more professional asset management personnel or further improving the professional capabilities of existing employees. Second, the government may also consider granting asset-receiving institutions more supervisory power on the premise of ensuring the independent operation of SOEs.