Research On The Value Relevance Of Government Subsidies

Under Chinese institutional background and capital market environment,government subsidy,as a non-recurring profit and loss item,is ubiquitous in the accounting surplus of listed companies.Moreover,the amount incurred is large,which is of sustainability and importance.Through the study of China's stock market,it can be found that it has become a common phenomenon for listed companies to obtain government subsidies,especially in recent years,the government subsidies have increased in amount and coverage.Government subsidies have had a profound impact on China's economic and social development and listed companies in the capital market.In the implementation of the government subsidy standards issued in 2007,there are some problems in distinguishing between government subsidy and operating income,accounting treatment of fiscal discount interest,and whether all received government subsidy should be included in non-operating income.In 2017,the ministry of finance issued the newly revised accounting standards for enterprises no.16--overnment subsidies.The implementation of the new government subsidies is aimed at making the accounting treatment of enterprises more standardized and more consistent with reality,and improving the quality of financial statement presentation and accounting information transparency.So,does the implementation of the new standards improve the quality of accounting information of enterprises,is it in line with the original intention of the standard setters?Does it make sense to revise the government subsidy presentation and disclosure of the new criterion into the current profit and loss?Can it provide more information for investors to make decisions?Therefore,under this realistic and institutional background,it is of great significance for investors,policy makers and listed companies to study the impact of the reform of standards on the value relevance of government subsidy information.Most of the existing literatures related to government subsidies are studied from the perspectives of the influencing factors of government subsidies,motivation effects,and their relationship with enterprise earnings management,r&d innovation,and business performance.In the research of value correlation,the fair value,comprehensive income,other comprehensive income and non-recurring profit and loss are the most.At present,the research on the value relevance of government subsidies is mainly based on the implementation of accounting standards in 2007 and the different property rights and industry divisions.In the current institutional background of the reform of government subsidy standards,the existing research has been lack of timeliness,and the implementation of the new standards in the context of investors'investment decisions lack of guidance.Based on the newly revised government subsidy guidelines,this paper studies the impact of the reform of the guidelines on the value relevance of government subsidy information,which is helpful to test the implementation effect of the new guidelines,and whether the market response meets the expectations of the guidelines,so as to provide help for investors to make investment decisions.In this paper,the annual report data of a-share listed companies in Shanghai and shenzhen from 2013 to 2017 were selected as the research samples.The price model was adopted to test the value correlation of government subsidy information before and after the revision of government subsidy criteria,and the implementation effect of new government subsidy was investigated.The implementation of the new government subsidy standards will theoretically make the accounting treatment of enterprises more standardized,more in line with the reality,and improve the quality of financial statement presentation and accounting information transparency.Therefore,this paper expects that in the capital market,the value relevance of government subsidy information will be improved after the implementation of the new standards.The innovation of this paper and the research value of:(1)different from existing based on old criterion on the research of the governmental information value relevance,this article is based on government subsidy standard revision background,the research criterion changes impact on the value relevance of government subsidies,more timely and investment decisions of investors has more reference value,also evidence can provide guidelines of reform practice.(2)it complements the lack of research on the value relevance of domestic government subsidy information.Under the special system background and capital market environment of our country,the government subsidy exists generally in the accounting surplus of listed companies.(3)based on the different nature of government subsidies received by enterprises,this paper divides the government subsidies received into two categories according to whether they are related to daily activities and studies their value relevance.