The effects of the split share structure reform on Chinese listed firms’ leverage decisions

•We examine the effects of the split share structure reform on the leverage ratios.•Non-state-controlled firms reduce the leverage, and state-controlled firms do not.•State ownership plays a decisive role in leverage decisions.

This paper examines the effects of China's split share structure reform on the leverage decisions of listed firms. The results show that there are two effects, multiple large shareholders and liquidity that affect the leverage ratio. In non-state controlled firms, multiple large shareholders are able to monitor the controlling shareholders which reduce the leverage ratio. However, in state-controlled firms, they collude with the controlling shareholders to expropriate through debt financing. State ownership plays a decisive role in driving multiple large shareholders to collude with the controlling shareholders.