Political Connections,Government Subsidies And The Performance Of Zombie Enterprises

Since Kane first put forward the concept of zombie enterprises in 1992,increasing scholars at home and abroad have devoted to studying zombie enterprises,which however mainly focus on the identification,causes and withdrawal mechanism of zombie enterprises and few studies focus on the performance of zombie enterprises.In the process of decommissioning zombie enterprises,the performance is one of the important bases to judge whether they should be cleared or reorganized.Therefore,it is important to study the performance of zombie enterprises.At the same time,zombie enterprises in China are different from those abroad.The main characteristics of zombie enterprises in China are relying on bank loans and government subsidies to survive,low innovation ability,occupying large amounts of resources without producing the corresponding economic benefits.From the perspective of the market,zombie enterprises cannot produce economic benefits but use a large amount of government and bank resources,which makes the whole society lose normal competition order.This shows that the government and zombie enterprises have an extremely close relationship.Therefore,the main subject of this paper is zombie enterprises,studying zombie enterprises from the perspective of political connections,the relationship between political connections and government subsidies of zombie enterprises,the relationship between political connections and performance of zombie enterprises,and the relationship between government subsidies and performance of zombie enterprises.The government subsidy is used in the calculation of the net profit,so it cannot truly reflect the past production and operation performance of the enterprises.Thus,while studying the performance of zombie enterprises in this paper,all indicators deduct the impact of non-recurrent profits and losses,and integrate the innovation ability of zombie enterprises,so that the most reliable zombie enterprises performance can be obtained,and the impact of political connections and zombie enterprises performance can be evaluated.In this paper,zombie enterprises in Shanghai and Shenzhen A-share listed companies from 2013 to 2017 are taken as the object of this study.Through the inductive deduction method and empirical research method,the results show that zombie enterprises are different from normal ones.There is a negative correlation between the political connections and the performance of zombie enterprises,which indicates the political connections essentially reduce the comprehensive performance of the zombie enterprises.At the same time,the political connections of the zombie enterprises are significantly positively correlated with the government subsidies,the political connections of zombie enterprises help them to obtain government subsidies.Further,there is also a negative correlation between government subsidies and the performance of zombie enterprises,which ostensibly improve the profitability of enterprises.But in fact,government subsidies reduce the comprehensive performance of zombie enterprises,and play a mediating role between political connections and the performance of zombie enterprises.The innovation of this paper is as follows: firstly,the enterprise performance evaluation system of zombie enterprises is reconstructed.All indicators deduct non-recurrent gains and losses,and the innovation ability of enterprises is regarded as one of the evaluation indicators of zombie enterprises performance.Secondly,study the performance of zombie enterprises from the perspective of political connections and government subsidies,which is relatively rare in existing researches.