Market Competition, Government Subsidies And Enterprise Performance

Government subsidy is the most direct means for governments in transitional economy to achieve political goals, economic goals and social goals, in recent years, with the continuous development of economy and the deepening of the degree of government regulation, government subsidies have been widely existed in the listed companies in our country, what is the economic effect of government subsid ies and which way can improve the economic effect of government subsid ies, these questions relate to the efficiency of fiscal funds, and are the problems that the governments want to find out urgently. Given this, this paper describes the current situation of government subsidies of the listed companies firstly, analyzes and summarizes government subsidies from several angles, including the overall situation, industry, enterprise nature, market competition, ST companies and non-ST companies, on this basis, empirically tests the relationship between government subsidies and enterprise performance and the impact of market competition on their relationship, both of the tests are based on the comparison of before and after the financial crisis. The study of this paper can not only help to deeply and objectively understand the economic effect of government subsid ies, but also provide some useful ideas about investigating and regulating government subsidies.This paper uses the Shanghai and Shenzhen A-share listed manufacturing companies between 2003 and 2014 as research samples, the study finds that before the financial crisis, government subsidies can not significantly improve enterprise performance, but after the financial crisis, government subsidies have a significantly increasing effect on the enterprise performance, which manifests that the efficiency of government subsidies improves after the financial crisis. Market competition plays a improving role in government subsidies’ economic effect after the financial crisis. Furthermore, this paper distinguishes enterprise nature in the research and find s that the improving role that government subsidies plays in state-owned enterprises only appears after the financial crisis, and market competition doesn’t significantly influence the relationship between government subsidies and state-owned enterprises’ performance, for private enterprises, whether before or after the financial crisis, government subsidies can significantly improve private enterprises’ performance, but market competition plays a positive role in the relationship between government subsidies and private enterprises’ performance only after the financial crisis. The further study about ST companies finds that whether before or after the financial crisis, government subsidies fail to improve ST companies’ performance, at the same time, market competition fails to have an effect on improving government subsidies’ economic effect.According to the above conclusions, this paper puts forward some suggestions: First of all, in order to improve the efficiency of government subsid ies, government subsidies supervision and evaluation mecha nism should be established and improved. Secondly, actively promote market competition to be health, fully play the positive role of product market competition, make economic resources like government subsidies boost enterprises’ development. Finally, establish a new relationship between governments and enterprises, governments should streamline administration and institute decentralization, create a fair market environment for enterprises, help enterprises achieve healthy growth.