The Motives And Its Economic Consequences On The Listed Companies From Local Government's Subsidies

In recent years, the subsidy income in the annual data of listed companies increasingly attract attention from the whole society. Those listed companies which obtain the subsidy income can be divided into three types. One is the change of national industrial policy, another is government transfer payment, the other is rescue of companies in dilemma. Subsidy income can be regarded as a kind of profits transfer to the enterprise from the government. From the theory of transfer payment, the purposes of profits transfer are nothing but encouraging and fostering the development of certain industries and rescuing some companies in deep waters.However, during the transformational period of our economic system, local governments are encouraged by developing local economics under decentralization system. An in-depth analysis of the motives that influence local governments on implementing financial subsidies for listed companies and an exploration of the economic consequences resulting from local governments implementing financial subsidies are of positive and practical significance for catching the rationality of our policy of the financial subsidies, which is the consideration this paper bases on.This paper consists of five chapters as below:Chapter One "introduction" first defines the background of the selected topic and the purpose and significance of this paper, and then reviews and analyzes problems that need further study according to relevant researches home and broad, based on which the research contents and methods are put forward, and finally discusses the feature.Chapter Two "theory analysis" is emphasized on going over the theory of financial subsidies and analyzes local governments' behavior during the economic transformation from the angle of government interest theory.Chapter Three "study on the subsidies to the listed companies from local governments, the motives and the influence of the effective" concretely analyzes the manners and motives of local governments giving subsidies to listed companies and the influence on social economics, based on which research hypothesis is put forward.Chapter Four "empirical study" mainly takes the listed companies that received subsidies from local governments in 2005 as research subject and verifies the hypothesis mentioned in the previous chapter on research models, using related financial data from 2004-2006 annual report of the listed companies.Chapter Five"conclusion and suggestion" draws conclusions according to empirical study and analyzes this paper's theoretical contribution and practical relevation, and gives futher research suggestion. Through this paper's research, out of local protectionism, local governments indeed had the motives to financially support local listed companies by financial manners in order to help them have more advantages in competition, and the financial support got better economic effective. Moreover, due to the existence of government performance system and enterprises' rent-seeking, local government did not show up strong motive to give financial subsidies to the listed companies which made bigger contribution to local GDP.