Rent-Seeking,Government Subsidies And Earnings Management

In recent years,the local government to give more government subsidies to listed companies,government grants coverage is also growing,the vast majority of listed companies in all walks of life can get government subsidies.Corresponding with the rising amount of government subsidies,the government subsidies in the implementation of the process of irregularities are also more and more.After the Third Plenary Session of the Eleventh Central Committee,decentralization reform,the central government is generally only responsible for the development of a programmatic financial route and policy,the enterprise has a direct effect of the policy is through the local government to develop.Government use of administrative power on the economic activities of enterprises to intervene and control on the resulting rental,enterprises in order to seek the right of the hands of the Government to obtain rent is the "rent-seeking activities." Rent-seeking activities can help enterprises to strengthen government-enterprise relations,in order to obtain more government subsidies.And government subsidies as a listed company's non-recurring gains and losses will undoubtedly help enterprises to improve business performance,this occasional local government subsidies will soon change the company's operating performance.And China's state-owned enterprises have a loss of subsidies,can make enterprises from losses,which led to China's economic market has a special phenomenon of earnings management,listed companies use government subsidies for earnings management.It has become a major motivation of listed companies to do rent-seeking activities.First,after reviewing domestic and foreign literatures on rent-seeking,government subsidies and earnings management,this paper chooses A-share listed companies in Shanghai and Shenzhen as sample samples from 2008 to 2014,(the absence of a sample for 2015 is due to a lack of government subsidy data),descriptive statistics of government subsidies are presented from three aspects:year,industry and region.In addition,analyze the ratio of government subsidies to net profits of listed companies,the profitability of listed companies using government subsidies,and the real earnings management of listed companies.Then,this paper selected Kingsun as a case study of specific companies,as Kingsun industry-owned national policy to support the LED industry,government subsidies and their performance must have some connection This paper analyzes the rent-seeking activities on the basis of Kingsun's bribery case,and further studies the relationship between rent-seeking and government subsidy,the earnings management by using government subsidy,the real earnings management of enterprises and the relationship between government subsidy and real earnings management.Finally,based on the summary of the case study,this paper puts forward the relevant policy recommendations.The study finds that listed companies can get more government subsidies through rent-seeking;listed companies will make use of government subsidies to make profits and manage unrealistic profits;government subsidies are related to real earnings management with surplus management methods:To the real earnings management of listed companies,government subsidies accounted for a larger proportion of net profit.