The Research Of The Impact Of Government Subsidies On The Corporate Innovation Based On The Financial Constraints

In the increasingly fierce competition of global national strength, China must insist in the road of independent innovation with characteristics and deepen the reform of science and technology system. Science and technology innovation plays a leading role and the corporate play a dominant role in the national development. Therefore, a new situation of Chinese innovation development will be created constantly. In the innovation process, the funding of research and development plays a important role in the innovation activity, is the basic condition and fundamental power to advance the innovation capability and enhance the technological element of the production. Corporate funding of research and development is not only related to the government subsidy, but also related to its own financial constraint. On the one hand, the government subsidy can lower the cost and the risk of corporate innovation activity. As a result, this can encourage the enterprise make a decision of innovation. On the other hand, the government subsidy can distort the market’s ability of resources allocation, break the normal market’s competitive order and restrain the corporate innovation activity. The financial constraint can exert an inhibition action on the corporate innovation activity, and at the same time influence the role of the government subsidy to the corporate innovation activity. Few scholars pay attention to this effect.This issue is based on the literature scanning, adopts the method of combining theoretical analysis and empirical analysis, and clarifies the research achievements of previous scholars. The theoretical analysis is based on market failure, information asymmetry theory, principal-agent theory. This paper analyzes the two contrary effect which the government subsidy influence the innovation activity, the inhibition effect of the financial constraints, the interact effect of government subsidy and financial constraints. The empirical analysis uses the sample of 1244 listed companies with the heterogeneity of financial constraints and industries during 2007 to 2013, and studies that how the government subsidy influence the innovation when the enterprise faced the financial constraint. This paper uses the panel data and the quantile regression. The conclusion included some important details. First, only when the corporate technology innovation level is in the middle, the remission of financial constraints and the increasing of government subsidy can have the most positive effect for corporate innovation activity. Second, the government subsidies could promote the innovation, and the financial constraint could limit the innovation. Third, the stimulation of government subsidy would become weaker even reverse when the enterprise faced harder financial constraint, especially financial constraint is over the limit. Forth, the stimulation in technological enterprise is the best, that in the capital is the second place, and that in the labor is the worse. Last, the probability is little that listed companies have the rent-seeking behaviors, and the cost what the enterprise keep in touch with the government could promote the innovation.Therefore, this paper put forward to the corresponding policy recommendations. The government should strengthen the enterprise information disclosure mechanism to reduce the enterprise financing constraint problem because of information asymmetry problem, perfect the scientific subsidy mechanism to grant the government subsidy for targeted, establish an effective subsidies supervision mechanism to adjust government subsidies dynamically. This paper hopes that the policy recommendations can promote the effect of the government subsidy extremely.