Based on data from Chinese A-share listed companies from 2008–2018, an investigation is carried out upon the impact of mixed ownership reforms and relative control transfers on corporate innovation before and after the occurrence of mixed ownership reforms, and relative control transfers in state-owned and private enterprises, as well as their mechanisms of action. A double-difference propensity score matching method is adopted. It has been found that mixed ownership reforms are more likely to promote innovation in SOEs, particularly in monopolistic industries. A further sub-sample test reveals that in state-owned enterprises in monopolistic industries, the acquisition of relative control by private shares can amplify the innovation effect of mixed ownership reforms. In private companies in competitive industries, state-owned shares can only fuel innovation if they gain relative control. Reducing agency costs and easing financing constraints are important channels for mixed ownership reform to promote corporate innovation.

With China’s entering into the era of high-quality development, we have studied in this paper whether and how the so-called ‘zombie firms’ have inhibitory impact on the quantity and quality of corporate innovation in normal enterprises. Using the 1998–2013 Chinese industrial database as the empirical evidence, we find that the inhibitory impact is significant, and particularly imminent for those normal enterprises with high innovation intensity under further inspection of heterogeneity test. Impact mechanism test indicates two major channels through which the inhibitory impact manifests: competition distortion and financing constraints. Our study not only clarifies the impact of zombie firms on the quantity and quality of corporate innovation, but also provides both theoretical and empirical reference for policymakers in China to properly address the problems of zombie firms and promote high-quality corporate innovation.