The Empirical Study Of Governmental Subsidies And Enterprise R&D Expenditure

After continuously having developed for more than thirty years since the beginning of the reform and opening, the speed of Chinese economic growth has been slow down. To achieve further economic development on the new period, Chinese government has to readjust the industrial set-up, change the economic growth patterns and pay more attention to the importance of technology innovation. The suggestion of 13 th Five-year Plan discussed by The Fifth Plenary Session of the 18 th CPC Central Committee has proposed that innovation should be the head of five development theories, and on the way to realize total innovation, technology innovation should play the leading role. Since enterprises are the main strength to make innovations, Chinese government has greatly increased financial subsidies for enterprises over the years. As the financial supplement range extends, clearing the relationship between governmental subsidy and company R&D expenditure, and comprehending the operation mode of governmental subsidy have the practical significance and have been more and more important. Even though there existed a large amount of researches related to governmental subsidy and company R&D expenditure in the academic world, the existing documents didn’t draw a consistent conclusion because of different scholars using different sample selection as well as different way of making research. Enterprise scale and enterprise financial development level are two factors, which influence company’s financial strength. Different financial strength can affect the function of governmental subsidies. Therefore, this article will take these two factors into account. Taking Chinese characteristics into consideration, this paper will mainly divide into two parts. On the basis of studying the relationship between governmental subsidies and company R&D expenditure, make a further study about the different relationship between governmental subsidies and R&D expenditure of different companies which have different financial strength.The objects of this study will be all the listed companies between the year 2009 and 2014 in Shanghai and Shenzhen A shares but except financial industry companies. The research contents can be divided into two aspects: how does the governmental subsidy influence the company’s R&D expenditure? And what difference will governmental subsidies make in companies which have different financial strength. When considering diverse enterprise scales, what would the relationship between governmental subsidy and company’s R&D expenditure be? The relationships might make a difference. Besides, when considering different enterprises which have various financial development levels, what would the relationship between governmental subsidy and company’s R&D expenditure be? By building a test model, collecting and dealing with the related variables data, carrying on descriptive statistics, correlation analysis and regression analysis for variables, we get the results and relevant suggestions for this paper. The results are as follow: First of all, the increasing amount of governmental subsidies for enterprises can promote companies’ R&D expenditures. Secondly, comparing to companies which have larger scale, the excitation effect between governmental subsidy and enterprise R&D expenditure is much more remarkable in smaller scale companies. Lastly, comparing to companies which are located in places having higher financial development level, the excitation effect between governmental subsidy and enterprise R&D expenditure is much more remarkable in companies which are located in comparatively backward area. According to the results of this paper, several pieces of suggestion can be put forward. Firstly, the government should continuously increase the financial support for enterprises, and at the same time, financial support policy should extend the scope to benefit more enterprises. Secondly, when choosing companies to subsidize, take more considerations about smaller and lower financial development level enterprises which might have higher efficiencies. The last but necessary piece is that government should enhance the supervision of relevant departments to make sure subsidies function well.The structure of this paper can be divided into five parts: introduction, literature review, theoretical analysis, empirical analysis, as well as conclusions and recommendations. Comparing to existing documents, the innovation points of this paper might exist in two places. The one is taking enterprise scale and enterprise financial development level into consideration by using interaction items, on the basis of studying the relationship between governmental subsidy and company R&D expenditure. The other one is using the latest enterprise data, which improves the accuracy of the paper. The deficiency of this paper might be the data selection of government subsidies. It’s difficult and inaccurate to collect the government R&D subsidy data from enterprise annual report. That’s why the paper will choose the total amount of government subsidies which has some difference with R&D subsidies. But the difference between them will not influence the result of this study.