Research On The Impacts Of Government Subsidies To Firm Financial Performance

How to deal with the relationship between government and the market is a key issue of China’s economic reform. The government subsidies are important measures for government to participate in market activities directly and arrange social resources. Governments can provide subsidies to specific enterprises through financial appropriations, financial discount, tax subsidies, etc., to guide industrial development and express the attitude of government. Renewable energy enterprises take great significance to develop economic of comprehensive, coordinated and sustainable. As an important component of low-carbon economy industrial chain, it gains government subsidies of a wide range. However, how the government subsidies effect renewable energy company’s financial performance, and what the differences of impacts of different type of government subsidies to firm financial performance.In order to clarify the impacts of government subsidies to firm financial performance and the differences of impacts of different type of government subsidies to firm financial performance, this paper used the financial data of Shenzhen and Shanghai A-share listed companies in the renewable energy sector from 2011 to 2014 as the basis for study, and based on the factor analysis to build a variable of financial performance indicators(Z0) to estimate the financial performance of renewable energy industry listed companies. Also, test the impacts of different government subsidies to firm financial performance through panel data regression model.The results show: for the total renewable energy companies, the more they gains, the higher their financial performance show. The government subsidies has a significant and positive impact to firm financial performance; Besides, among the three types of government subsidies of renewable energy companies, financial appropriation has the most significant positive impact to firm financial performance. It’s the most effective measures for enterprises to improve their financial performance. Further, in the comparative study of the renewable energy industry in the secondary industry, the effect of the implementation of government subsidies to the wind energy industry, better than the solar industry.Accordingly, this paper propose the following recommendations: establish a scientific and transparent decision-making mechanism of government subsidies; constructing government subsidies performance evaluation system; strengthen the supervision of the implementation of government subsidies.