Study About Government Subsidies And The Effects

As an important means for local governments to support the development of enterprises,government subsidy has profound historical significance in optimizing the allocation of resources and promoting economic.In the early planned economy period,companies accepted government resources through "planned quotas".Nowadays,enterprises still strongly depended on government subsidies.The reasons why government vigorously supports development of local enterprises include two aspects:First,as the public affairs manager,the government needs to promote employment,maintain the market order and optimize the public service.Second,the construction of jurisdiction economic relates to official performance.Enterprises in jurisdictions are the strong drivers of these goals.However,the resources owned by governments are limited,not all companies can get those.It likely leads to competing among local enterprises.We could think:whether local companies will take the initiative to meet government standards to obtain government subsidies?Whether the subsidies could play their effects?Based on different property rights,the state-owned enterprises and private enterprises are different in the allocation of resources,management risk and government treatment,does that impact behavior of enterprises?This paper discussed catering behavior of listed companies in different property rights combined with the theory of asymmetric information from the perspective of rent-seeking and surplus manipulation and explored the effect of government subsidies.On the basis of studying,we got the following conclusions:(1)The negative earnings manipulation and rent-seeking can help companies obtain the government subsidies,so companies are likely to cater to the government.(2)For style preference,private enterprises tend to make the government officials by "bribe" or establish political connection;however state-owned enterprises enjoy both.(3)The government subsidies could significantly improve the value of state-owned enterprises,but the value of private enterprises is not dependent on government resources.(4)Negative earnings manipulation and "bribe" rent-seeking distort the allocation of government resources,damage the value of state-owned enterprises,private political relations also damage the efficiency of the government subsidies;(5)Whether the enterprises loss before obtaining the government subsidies and the pressure of local government promotion willa affect the choice of ways.To a certain extent,this paper will give references for reasonably planning government subsidies,identifying subsidy objects and regulating the behavior of market transactions.