This study examines the relation between earnings informativeness, measured by the earnings-return relation, and government ownership by using Chinese data. Given the prevalence of pyramidal ownership structures, we identify the ultimate controlling shareholders and then hand-collect data on government shareholdings. This study finds that the level of government ownership is negatively associated with earnings informativeness. The result is driven by firms which have been listed for more than three years. However, the higher percentage of shareholdings held by the second largest shareholders could mitigate the negative impact of government ownership on earnings informativeness. Our results provide support to the argument that government shareholders become entrenched to pursue their private benefits when being involved in business enterprises.