Study On Problems In The Government Subsidy Of Listed Companies And And Its Countermeasures

A serious financial crisis occurred in the United States in2007, and then in a veryshort time it becomes a global economic crisis. The economies of almost all countries havebeen affected by the financial storm; the economy of China has also been influenced by it.The most obvious manifestation is that some of the Industrial enterprises andexport-oriented enterprises suffered a unprecedented and unavoidable hit, fortunately, theChinese government quickly implemented many programs to stimulate domestic demand,such as4trillion investment plan and "ten industry" industrial-reinvigoration plan. Localgovernments also take active measures to stimulate domestic demand, the governmentbudget accumulated up to more than$18trillion. In China, fiscal policy formulated by thecentral government; local governments implement the specific policies, in response to thefiscal policy that made by central government, and government subsidies can be used bythe local governments to control the Listed Companies directly or indirectly. Thus it can beseen, local governments’ intervention in Listed Companies through fiscal policy is directand clear. As an important means of local government intervention in Listed Companies,what is the motivation of government subsidies? Especially in recent years, the subsidieswhich local governments give to Listed Companies are more and more, it leads to such aphenomenon that Listed Companies use the government subsidies to improve the profit forthe period. It is clear that the government subsidy is a double-edged sword. Although it canhelp both local government and Listed Companies realize ‘win-win situation’, but this"win-win" is based on the disruption of our stock market. Moreover, the Listed Companiesonce tasted the ‘sweetness’ of government subsidies, they may lay stress on how to obtainbenefits from government instead of improving the core competitive ability of enterprise.This may lead to a bad situation that the Listed Companies are too dependent ongovernment support and cannot be developed healthily.The new accounting standards began to implement in2007."Enterprise AccountingStandards No. sixteenth government subsidies" is more detailed and clear than before. Thisnew accounting standards obtain kinds of effective containment of the situation thatenterprises taking advantage of government subsidies to manage earnings, but the deterrenteffect is not as good as we expect, so complementing the standards is of great urgency.This article analyzes the insufficiencies of accounting standards in China by comparing the"accounting standards for Enterprises No. sixteenth-government grant" and "International Accounting Standards No. twentieth, accounting for government grants and disclosureof government assistance", and analyzes typical case to make some suggestions for theimprovement of our government subsidies standards.