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Study On Policy Effect Of The Government Subsidy Of Listed Chinese Enterprises

Posted on:2015-10-29Degree:DoctorType:Dissertation
Country:ChinaCandidate:G XuFull Text:PDF
GTID:1109330467487008Subject:Business management
Abstract/Summary:PDF Full Text Request
Government subsidies, as a tool of macro-regulation policies, have an important impact on the company’s action. Since the financial crisis, the government subsidies to the listed company were significantly improved. According to Shanghai securities news reported,more than ninety percent of the listed companies in2012received various forms of government subsidies, and there were112listed companies that received government subsidies more than100billion RMB. In2012Petro-China had received government subsidies of9.4billion RMB. The listed company enjoyed free lunch of government subsidies. This also aroused more and more attention of the media and the masses. But lack of honesty, imperfect legal system and the markets, government subsidies have frequently faced questions from investors and the Public. In the trade friction, the government subsidies especially are a hotspot issues. So it is an urgent problem to research the related questions of government subsidies like this:is it fair to the government subsidies systematically? Do the government subsidies play a role to guide the development of industry, encourage innovation, or help companies to manipulate surplus? Do the government subsidies influence investment behaviors of the companies? The series of problems above still need to research based on the capital market in our country. The research conclusion will help the government to implement reasonable subsidy policy, to create good market climate, to respond to the concern about government subsidies. This paper includes a few aspects as follows:(1) The article systematically studied the government subsidies’ distribution characteristics under special situations in China. From the industry distribution perspective, the article shows that government subsidies are provided to the utility industry and high-technology industry of listed companies. This reflects that the government prefers to subsidize the high-tech listed companies and suggests that the government pays more attention to high-tech and compensate the utility industry for taking on social goals. From the regional distribution perspective, the government subsidies obviously rely on the local government’s fiscal revenues and the level of local economy. Although in the western region, government subsidies for the listed company gradually increase, but its rate of growth is obviously lower than that in the eastern region, the reason is that fiscal revenue is limited in the western region. The local government has no more financial subsidies to provide the local company. Undoubtedly, it will reinforce the imbalance of the region economy. In terms of company properties, the intensity of government subsidies to private companies also begins to rise sharply, but in contrast, government prefers to subsidize state-owned company. In addition, government subsidies the ST companies received are considerably below the others.(2)The article analyzes the main factor that influences company to get government subsidies under the institutional circumstances in China. The evidences show that if the degree of fiscal decentralization is high, the state-owned company will receive more subsidies significantly, but the private company will receive little subsidies. The result suggests that it is unfair between state-owned and private company. Ownership discrimination leads to the institution. The article also finds that Political Connection can help the company to receive government subsidies, which means that Rent-Seeking makes the company to get the government subsidies. Thus, the government should avoid the injustice.(3) The article analyses the major profitability how the government subsidies affect the company’s investment direction. The result shows that government subsidies significantly affect the company’s investments. Specifically government subsidies can stimulate the company to expand fixed asset investment. On the other hand, government subsidies lead to a significant reduction in outward investment. It shows that the company expands inward investment and crowds out outward investment. Economic growth significantly influences relationship between the government subsidies and fixed assets investment in company. The slower economy develops, the more significant the correlation is. The result also shows that in order to guide the company’s investment to drive economic growth, the local government subsidizes to encourage the company to expand investment.The research conclusion also suggests that the government subsidies have an impact on over-investment.(4) The article discusses the investment expenditure and over-investment of company caused by government subsidies. The results shows that government subsidies inspire the company to expand investment scale, the inspiration which government subsidies influence the investment for state-owned companies is more sensitive than that for private company. Regional marketization process and economic growth also significantly affect the investment inspiration of government subsidies. The lower marketization process is, the more significant the correlation is. It is still serious that the investment is inefficient. Government subsidies contribute to over-investment and cannot improve company value. Therefore, it is urgent to reform government subsidies policy from the perspective of the investment efficiency. The main contributions to theoretical research and practice in government subsidies can be summarized as follows:l.The article shows that the strong motivation of economic growth that drives local government to induce investment will affect the investment structure and provides new evidence that the government affects the company behavior.2. Previous researches are mostly confined to that government subsidies make an impact on corporate’gross investment, this article first airs the idea that the government subsidies will affect the investment distribution and structure of company. This research has enriched existing documents in this field about the relationship between the government subsidy and company investmentAbove research’s result indicates that government subsidies are inefficient. Performance evaluation system spurs the local government to promote enterprise to invest in fixed-assets who has an evident pulling function on economic growth, thus interferes with decision-making of company. Therefore, the government subsidy policy is yet to be improved. The article puts forward the countermeasure proposal:regulating government-enterprise relationship to build harmonious and fair market environment, Improving information disclosure requirement of government subsidies, establishing monitoring mechanism, building and perfecting the efficiency evaluation system, changing performance evaluation system for pursuing economic growth simply.
Keywords/Search Tags:Government Subsidies, Fiscal Decentralization, Over-Investment, Economic Growth, Investment Orientation
PDF Full Text Request
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