Government Subsidy,enterprise Life Cycle And Perks

Government subsidy is an important means to interfere in the operation of enterprises and support the development of enterprises for the government.In recent years,with the increasing coverage of government subsidy,it has played a more and more important role in the process of enterprises' development.However,if the subsidy is not used effectively,it will not only lead to the waste of national resources,but also lead to government subsidy being contrary to the original intention.Based on the agency cost theory of free cash flow,since the government subsidy will bring a large amount of cash flow to the enterprise,it is very likely to be used by the manager for personal gain and then increase the agency cost of the enterprise.In view of this,this paper will examine the allocation efficiency of government subsidy from the perspective of agency behavior of managers.Enterprise life cycle is an artificial division of an enterprise's development process by scholars.Its purpose is to explore the regular characteristics of enterprises in different stages,so as to help them better cope with the risks they may face in each stage of their life.The evolution of the life cycle is the problem that all enterprises must face,and its impact on enterprises is comprehensive and inevitable.Some studies have shown that enterprises will face agency problems of different degrees in different life cycle stages.Then whether the agency problems associated with government subsidy will also change with the life cycle of enterprises becomes the focus of this paper.As the perks is closely related to the cash flow of enterprises,this paper focuses on the typical agency behavior ——perks.The research object of this paper are A–share listed companies from 2012 to 2016.Based on literature research and empirical testing and combined with principal-agent theory,the free cash flow theory and life cycle theory,this article will examine the influence of government subsidy on executives' perks in different stages of life cycle from the dynamic perspective.The results of this study are as follows.Firstly,government subsidy encourages executives' perks.Secondly,there are significant differences in the perks of executives in different stages of the life cycle.In mature period,the perks of enterprises is higher than that of growth and recession.Thirdly,government subsidy promotes the perks of executive to varying degrees in different stages of the life cycle.Government subsidy of mature enterprises will lead to more perks than in growth and recession.The contributions and innovations of this paper are as follows.Firstly,the previous researches on the influencing factors of perks are mostly confined in the interior of enterprises.This paper brings the exogenous government subsidy into the scope of the research,which is innovative.Secondly,the study finds that the government subsidy may provide the capital supply for executives' perks and become their “accomplice” to seek private income.Therefore,this study reveals a hidden capital source of perks and provides a new perspective for the study of relevant restrictive policies.Thirdly,this paper finds that there are differences in the influence of government subsidy on perks in different stages of the life cycle.On this basis,this paper proposes: in order to ensure the efficiency of subsidy,the government should consider the life cycle of the object when making subsidy policy.This viewpoint has certain innovation and practical value.