A Study Of The Influence Of Economic Growth And Government Intervention On Company Performance

Under the premises of the economic growth of China, the changes of macro-economy policy (including the fiscal policy and monetary policy), and the development of listed companies, this paper, combining with the previous studies and theory of NI, puts forward the research hypothesis from the two dimensions of macro-economy policy and micro political connections. At the macro level, this paper uses the IS-LM model to quantify the macro-policy and monetary policy. At the micro level, this paper, referring to the predecessors’ achievements, measures the political connections. Based on a sample of a shares of listed companies’ 859 stocks, by building panel regression model, this paper makes an empirical analysis of the economic growth, government intervention and company performance(including accounting performance and stock returns) from the perspectives of macro level and micro level. The results of the study show that:1. although there exists a "deviation" phenomenon between the China’s stock price and real economy after the financial crisis, economic growth is still beneficial to the improvement of accounting performance and stock compensation of the listed companies from the long-term test results; 2. At the macro level, the expansion of fiscal policy(including government purchase, transfer payment and tax policy) and the loose monetary policy can effectively stimulate the growth of accounting earnings and stock returns in the listed companies. At the micro level, political connections exist "property rights protection" and "government favoritism" and "corporate social responsibility" these three major effects:on one hand, as an alternative mechanism of a poor system, political connections can protect private property rights, meanwhile, because of the government’s favor, the listed companies can get more aids and further increase the company performance; On the other hand, Political connections will bring more corporate social burden to listed companies, thus lower the profitability.4. This study also finds that, listed companies’ accounting performance is significantly influenced by the level of company assets, financial leverage and equity structure, and operating entities exist a certain continuity in their incomes; and stock returns, limited by the characteristics of China’s stock market, is more affected by the macro-economic policy, the system reform and the financial crisis, and the price of the stock is a random walk process.