| Summary: | ABSTRACTSupported by the principal-agent theory, higher-order theory, and financing constraint theory, this study aimed to examine the effect of disciplinary inspection commission (DIC) participation in BG on Chinese state-owned firms’ financing constraints. This relationship was also compared between state-owned and private firms, both of which are striving towards a circular economy. Data from a sample of A-share listed Chinese firms on the capital market from 2013 to 2020 was put through regression analysis and robustness testing. The analyses revealed that the involvement of DICs in BG has more a detrimental effect on private firms’ financing constraints. These findings are helpful for enterprises to rationally allocate and play the role of the DIC based on specific scenarios. The findings further provide an empirical basis for government departments and financial institutions to develop circular policies to alleviate corporate financing difficulties.
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