Political Connections, Government Subsidies And Enterprise Performance-the Evidence From The Privately Listed Enterprises

Government subsidies are very common around the world. In recent years, many researchers are trying to find out the factors affecting government subsidies ,and they do a lot of research and discussion about the jutstice and efficiency of government subsidies.However, the motives of the government subsidies, as well as the efficiency of government subsidies have not reached to an unified conclusion. With the state-backed company began to receive national attention in recent years, there are more and more studies on the relationship of enterprises and political connections.But there are still no uniform conclusions to how the political connections affect the performance of enterprises.There are many kinds of enterprise ownership in China.State-owned enterprises have very close relationship with the government and take the superior poisition since they are borned,while the private enterprises in reality have been discriminated and unequally treated. Thus, private enterprises tend to establish political connection with the government to protect their property rights and get other benefits,such as indurstry access, and tax preference,and so on. Since the subsidy activities were led by the government,Whether the concrete implementation process of government subsidies will be influenced by the political connection of private enterprise? Taking into account the political connections,could we find other reasonable explanation for the the uncertainty relationship between government subsidies and enterprises performance?Based on such theoretical and practical background, this paper attempts to explain the deep-seated motivation of government subsidies in the views of political connections and illustrate whether the government subsidies lost its equity in actual operation process. Then we further explore what changes will happen to the relationship between government subsidies and enterprises performance under the influence of political connections,in the purpose of finding the deep-seated factors influncing the the relationship between government subsidies and enterprises performance. Through statistics description, t-test, correlation analysis and Logit regression analysis for the sample of privately listed enterprises, the paper finally reached to the conclusions as follows:1.Political connections have influenced the chance of private enterprises to get government subsidies significantly,showing that political-connection company will be more likely to obtain government subsidies. That is to say, political connctions of private enterprises can effectively help them to get subsidies from government.2.The level of government intervention has influenced the relationship between government subsidies and political connections significantly,showing that political connections can benefit the private enterprises to get government subsidies in the severly interfered area,while in the lightly interfered area the effect of political connection cannot be observed.3.Political connections can impact the relationship between government subsidies and enterprise performance significantly.For the enterprises with political connections, government subsidies will enhance its performance.But for the enterprises without political connections , government subsidies will be useless for its performance. That is to say,political connections can weaken the government subsidies'positive impact on enterprise performance.The significance of this paper lies in:1.In recent years, the political connections have become a hot issue for researchers in various countries.Considering the system in China, we tested empirically the effect of political connections on government subsidies, and further analyzed the effect of government intervention on the relationship between government subsidies and political connections.Thus,this article will enriches and develops the literatures about government subsidies and political connections.2.In this paper, we considered government intervention in the research about the political connections and the possibility for private enterprises to get government subsidies.The results can provide relevant references for the subsequent innovation of government-enterprise and further improvement of implementation mechanisms of government subsidies.3.Under the effect of political connections,this paper discusses the influnce on coorperate performance exerted by the government subsidies. This can provide a new evidence to the effect of government subsidies on corporate performance, at the same time ,it can provide new ideas and perspectives for the study of the relationship between government subsidies and corporate performance.