Research On Effect Of Government Subsidy Of Listed Companies

Nowadays, many states offer government subsidy to their enterprises in countries all over the world with the increasingly fierce competition. The universal phenomenon of offering government subsidy to listing Corporation in the capital market also exists, and the form of government subsidy is various, and the type is diversifying in our country. As a kind of government intervention, government subsidy plays an important role on adjusting the market and preventing the ST listed company from delisting. This paper exams economic benefit and social benefit effect of government subsidy based on relevant data from2008to2011. Economic benefit is measured with the rate of return on total assets and the rate of revenue from both short term and long term, while social benefit is measured with the level of employment. The conclusion is that government subsidy can increase profit in short term, but government subsidy cannot help enterprises to improve their competitiveness from a long-term point of view. And it also shows that company striving for government subsidy may be motivated by retaining its listed qualification. Then, there is positive correlation between government subsidy and the level of employment, which shows that government subsidy can improve the social benefit and it plays its certain effect. According to the research results, this paper also proposes some recommendations about government subsidy and ST system.