The Effect Of Government Subsidies On Business Risks Of Enterprises From The Perspective Of Investment Behavior

With the continuous adjustment of external policy environment and internal business strategies,the possibility of business risks that companies are faced is also increasing.Government subsidies are an important means for the government to control the economy,since the outbreak of the international financial crisis,more and more subsidy funds have flowed into enterprises for the purpose of promoting investment and ensuring growth,however,there has been no qualitative conclusion as to how the subsidy funds will ultimately be implemented.Investment decision as the most critical business strategy in the company,to a large extent,can determine the success or failure of the company.Enterprises actively carry out innovation activities,and investment in R&D is also counted as an investment behavior,however,we know that R&D of companies needs continuous high-level funds as guarantees,in addition,even if R&D activities can be successfully carried out,they will not necessarily achieve high market returns,therefore,companies undertaking R&D innovation often need to bear great business risks.Over-investment means that companies are investing their free cash flow in new projects whose returns are not ideal,and this kind of behavior is usually deviated from the normal development of the enterprise,it is only a kind of unreasonable investment behavior which appears in order to enlarge the scale of investment for the consideration of enterprise executives' self-interest,this will not only reduce the effectiveness of the resource allocation in the company,but also cause business risks to occur.Government subsidies is an external resource that enterprises obtain free of charge,whether enterprises can effectively use will inevitably have an important impact on business risks.Therefore,whether the government subsidy can improve the enthusiasm of enterprise innovation activities,and then help reduce business risks caused by all kinds of uncertainty in R & D activities? Or whether the government subsidy will stimulate the excessive investment of enterprises,and then aggravate business risks caused by the unreasonable investment behavior of enterprises ? These issues require us to think deeply.Therefore,taking Chinese A-Share listed companies from 2012 to 2016 as a sample.Based on the theory of government and market relations,stakeholder theory,innovation theory and principal-agent theory.From the perspective of corporate investment behavior,empirically examines the economic consequences of government subsidies and more fully reveals the complex impact of government subsidies on business risks.Theoretically,it can enrich the literature on government subsidies research and broaden the perspective of government subsidies research.In the actual implementation,it can not only provide a reference for the enterprise decision-makers to carry out reasonable investment,but also provide some enlightenment to the allocation of government subsidies and the formulation of related policies.The empirical results show that,government subsidies not only encourage firms to invest in R & D,but government subsidies also stimulate over investment.Further research shows that,although government subsidies play a “double-edged sword” role in the investment behavior,in general,the positive effects of government subsidies on enterprises are stronger than the negative ones,government subsidies can significantly reduce business risks.Finally,the study also examined the influence of government subsidies on business risks is different in different enterprises.In companies with higher R&D investment levels,government subsidies can effectively reduce business risks;In companies with higher level of over investment,government subsidies largely exacerbate business risks.