Study On The Relations Between Political Association Of Business Executives And Government Subsidy

Political association of executives is a kind of common phenomenon in the economic development of all the countries, especially in our countries’economic transformation, the relationship between enterprise and government becomes significant as the result of the long-term relational culture and system.In the special "relationship" society of china, as the main body of market economy, enterprises have the certain "political relationship". Our enterprise was born to our government which has nature "blood relationship" with government that makes political association of executive possible. At the same time, the government officials came to enterprise and become the executive of enterprise which also makes political association of executive possible.The government meddling behavior of economy is the cause of political association which has tow opposed impact that support and plunder. Political association has significant impact on the production and operation, financial policy, business performance and even the capital market which make political association as the focus of enterprise and financial accounting. Now, many of the research hold that political association is valuable resource which could bring enterprise the financing convenience and the tax preferential market access and the privilege that have positive impact on the performance and resource of enterprise.In the term of the current research situation, although there are many researches of political association, there are still certain academic value and practical significances on government subsidies. Government subsidies are the behavior of government which in order to achieve certain results on redistribution of resource that is significant to the survival and development of enterprise. Nowadays, most enterprises on GEM are high-tech and have high growth, but this sort of enterprise are often short-time and smaller scale, in other words, they have lots of room to growth, therefore, our government has made certain system to support high-tech enterprise, among these system, the government subsidies is the most important means. The content of this paper is first summary the early research on government subsidies, then combine the development situation of the GEM to study the relationship between Political association of executives and government subsidies with the method of empirical.The structure of this paper is that:First, summary the early research on government subsidies and find that the early research has certain limitations, most scholars mainly have research on the impact between political association and enterprise performance, to the government subsidies, the research also mainly focus on the political purpose of local government. Then, on this basis of Rent-seeking theory, this paper tries to analyze the Correlation between the political subsidies and political association.On the basis of theoretical analysis, we selected the Shenzhen stock exchange2010years ago listing on the gem154enterprises, eliminating the data of enterprise, then using146home as the samples, in2010, as a research study interval. Through the descriptive statistics, we found that146enterprises in145have access to a government subsidy, amount to nearly$1billion. There are73enterprises existing executives political association, accounting for fifty percent of the total sample size, there are political associated enterprise average political relevance score of5.10points.114homes in private enterprise,51home exists political association, the enterprise average political relevance score of4.84points, and32state-owned shareholding enterprises in the home22existing political association, scoring average of7.2points.Through the empirical research of this paper, we have the conclusions that there is no overall impact between political association and government subsidies, although taking into account the intervention of local government and Regional wealth wealthy; there is no change in the result. Therefore, considering the surplus of the regional financial, we find that in the region where the local government has more surplus of financial, more government subsidies the local enterprises obtain.From the empirical of this paper, we also get some enlightenment that the governments’subsidies behaviors are support to enterprise, enterprise is able to enhance profit through government subsidies. As respects to the listed enterprises on GEM are uncorrelated to government and the universality of government, we can find that the local government response to encourage and support the better six new " enterprise development policy. But to consider the local government fiscal surplus cases results also indicated that the policy from government subsidies to the object, such as the number of specific content refinement make regulation, the standard of government subsidies to the relevant laws and regulations. On one hand, we can do this from the private enterprise with restraint system of political association for "rent-seeking " advantage; on the other hand also can be used to reduce government officials’implementation of the subsidy policy capriciousness.This study has certain exploratory of which academic contributions are embodied in the following aspects:First, in this paper, the selection of subject has a certain novelty, the selection of gem listing enterprise as the research object, political relevance and executives of the relationship of government subsidies, this political connection to gem companies get government subsidies influence; And then further through the distinction between the enterprise ownership, investigation of the enterprises of different ownership political connection to gem companies get government subsidies influence;Second, because the government subsidies is part of the local government expenditure, so this paper in consider the local government intervention and fiscal surplus to political relevance and the gem companies the adjustment of the relationship between government subsidies, the introduction regulation variables model, examines further economic intervention and local government fiscal surplus to political relevance and the gem listing enterprise the government subsidies regulation effect.This paper also has certain limitation:because of the political connection range is very wide, it is difficult to comprehensive and accurate for measurements, and there’s a measure of subjectivity. Our government subsidies to the measure are considered the accounting within the scope of the subsidy, the lack of generalized subsidies behavior considerations. In addition, in the sample, due to open the gem board time is not long, and we have only select section data as the research object, this may produce very big effect to the results.