Government Subsidy And Investment And Financing Behavior

In the process of planned economy to market economy transition, the government use subsidy to participate the development of market economy, achieving the social and economic goals, also reflecting there has political relationship between government and enterprises. Recently, more and more listed companies received government subsidies, and the size is increasing. The way of enterprise external financing is usually divided into equity and debt financing. Government subsidies are becoming one way to finance. In 2014, 2398 listed companies received government subsidies, a total of 87.25 billion yuan, each company can receive 36 million yuan.Existing literature mostly believe that government subsidy will lead to enterprise soft budget constraint and cause over-investment. There are few papers research that government subsidy playing a positive role to the economic development of the enterprise or area. Meanwhile, the literature on how to guide enterprises to invest and finance with government subsidy is few.The article analyzed the overall situation of non-financial listed companies which received the government subsidy, and with the case of TCL group which continually obtain large amount of government subsidy found that government subsidy plays a positive guiding role in investment and financing behavior.