Research On The Impact Of Government Support Subsidies On Corporate Financial Performance

Since the reform and opening-up,China has changed from the planned economy system to the market economy system,and the market plays an increasingly important role in the allocation of resources.However,under the current market environment of China,the influence of government’s affirmative action to the enterprise still cannot be neglected,the local government often supports the enterprise vigorously,and directs the market’s development foreground through the policy guidance.Most scholars have studied the economic performance and social performance of the Government subsidy on the basis of the premise of government subsidy rationality,and the result often shows that the government support makes the performance of the enterprise better and the performance of the society.However,a few scholars have pointed out that the government subsidy may have irrational motives,which encourages enterprises to make inefficient investments,thus reducing the economic performance of enterprises.This paper takes the political championship theory as the starting point,considers the irrational factors that government subsidy may exist,and investigates the influence of government support on the financial performance of the enterprise.This article takes the government support type subsidy as the main research object,this kind of subsidy refers to the government to support the target enterprise,to the enterprise direct investment but does not have the special purpose fund.Because of the direct and soft constraint of the support subsidy,the enterprise can obtain more support subsidy by the government’s pandering behavior,thereby enhancing the profit level of the enterprise.This paper measures the financial performance from two angles of short-term financial performance and long-term financial performance,and examines the impact of support-type government subsidy on the short-term performance and long-term performance of the enterprise respectively.The research of this paper finds that the supportive government subsidy has positive influence on the short profit level of enterprises,while in the long run,the support subsidy can alleviate the financing restriction of the enterprise,but it can not improve the long-term profit level of the enterprise.Further research shows that the support subsidy can improve the business income growth rate by alleviating the financing constraint of the enterprise,but reduces the enterprise’s gross profit margin,research and development investment,increases the enterprise’s long-term management and sales expense,supports the subsidy that promotes the enterprise’s business scale,also has the negative incentive effect.