What explains valuation disparities between state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs)? The authors address this question using the Chinese stock market as our backdrop. Our study simultaneously considers a large number of economic hypotheses on why SOEs’ and NSOEs’ market valuations might differ. The findings suggest that differential distribution across industries only partially explains SOE/NSOE valuation differences. Profitability and its uncertainty emerge as the most significant influences on disparities, followed by liquidity and expected growth. After controlling for these influences, the authors find that valuation differences between SOEs and NSOEs become economically and statistically insignificant across industries. Their work provides evidence supporting the applicability of classical valuation theories in SOEs, which are often described as anomalously deviating from traditional models of value.