Government Subsidy、Ownership Structure And Total Factor Productivity

Government subsidies are a very common phenomenon from worldwide. In recent years, scholars from international and domestic academics have done a large amount of research on the fairness, efficiency and effectiveness of government subsidies. But so far, there is no unified conclusion on the research of how government subsidies increase total factor productivity. Meanwhile, total factor productivity is increased not just by government subsidies. The internal governance mechanism is more important. As a system of allocating enterprises resources, arranges and decides management behavior and it will have a significant impact on achieving results. Therefore, this article combines government subsidies with corporate governance, and uses micro-empirical data of multinational corporations in Shanghai and Shenzhen from 2007 to 2013 to have an empirical analysis of the correlation of government subsidies, ownership structure and corporate total factor productivity.The empirical results show that:(1) there is a non-linear relationship between government subsidies and total factor productivity, indicating that there is a different relationship between them under different conditions of government subsidies. When the intensity of government subsidies is low, it is negatively correlated with total factor productivity. When the intensity of government subsidies is high, it is positively correlated with total factor productivity. (2) There is a significant positive relationship between ownership concentration and total factor productivity. And this relationship is existed in all listed companies which are actually controlled by different people. To be specific, in the listed multinational private corporations, ownership concentration plays a bigger role of promotion in total factor productivity; There is a significant positive relationship between executive ownership and total factor productivity in all multinational enterprises, the private multinational enterprises plays a bigger role in total factor productivity than state-owned enterprises; In fixed and system GMM regression analysis, there is a positive relationship between institutional ownership and total factor productivity, the private multinational enterprises institutional ownership plays a bigger role in total factor productivity than state-owned enterprises.Therefore, the government should precisely know about the function of government subsidies, optimize the form of it. Government should abolish all kinds of hidden subsidies for state-owned listed companies and gradually reduce the strength of government subsidy so that enterprises can be in a fair market environment to improve internal governance mechanisms of listed companies. At the same time, the multinational enterprises should maintain a certain degree of ownership concentration, advancing the mixed ownership reform in stat-owned enterprise and increase the proportion of private ownership of capital; shareholders in private enterprises and appropriately reduce it in state-owned enterprises; the government should improve protection system for minority shareholders and establish independent risk reserve relief mechanism; the government should encourage enterprises to implement an appropriate stockholder’s rights drive for executives. Therefore, it can reduce conflicts of interest between managers and operators.In terms of institution investment, our government should promote the construction of institutional investor and broaden the proportion of institutional ownership.