Government R&D Subsidies,R&D Investments And Earning Persistence

Last year,the report of the 19 th National Congress of the Communist Party of China clearly stated that "the establishment of a technology-innovation system that focuses on enterprises as the mainstay,market orientation,and deep integration of industry,university,and research institute,strengthens the support for SME innovation,and promotes the transformation of scientific and technological achievements." It is planned that by 2035 our country ranks in the forefront of innovation-oriented countries and has become an innovating power by the middle of this century.When it comes to the road to becoming an innovative country,it is undeniable that the government continues to play an important role in the process of corporate innovation.The government's industrial policies and market-driven innovation policies are jointly escorting the small to medium-sized enterprises' innovative R&D activities.However,Does the government's support(mainly in the form of R&D expenditure subsidies)for enterprises,especially small and medium-sized high-tech companies with different R&D intentions,really play its due policy effect?For government's R&D subsidy and corporate R&D investment,What effect do these two have on the long-term development of the company(especially for the quality of earnings)? This paper is to better answer these questions.First of all,a normative research method was adopted.Through the review of domestic and foreign related topical literature and the summarization of key theories(public resource and industrial policy theory,earnings quality theory),combined with individual thinking on related issues,the initial hypothesis of the above question is assumed.Secondly,an empirical research method was adopted for the hypothesis: a small and medium-sized board high-tech enterprise was selected and its relevant data from 2012 to 2014 was collected,an econometric model was established,and related variables were defined and using the comparison of R&D's intensity and subsidy's strength in the current year as a criterion for evaluating the R&D intention of the enterprise.Through descriptive statistics,correlation analysis,regression analysis,robustness test and other methods,the impact of government subsidies acquired by companies with different R&D intentions on the growth of R&D investment was examined;in addition,Lag-phase Autoregressive model was used to examine the impact of R&D investment and government subsidies on the sustainability of earnings.We found that: First,whether companies with high R&D intentions or low R&D intentions,government's R&D subsidy have boosted the growth of corporate R&D investment.However,when other conditions of the two groups are certain,the annual input and investment growth of the additional investment group is significantly higher than that of the non-addition group.Second,if other conditions are certain,the Government R&D subsidies for this year will have little impact on the revenue for the next year and has no significant effect on the sustainability of earnings;however,this year's R&D investment has a significant positive impact on the next year's revenue,indicating that it has a significant role in promoting the sustainability of earnings.Finally,combining the research conclusions,this paper gives policy recommendations from the government and the enterprise respectively: for the relevant government departments,they should continue to distribute R&D under the conditions of strictly controlling the total amount and quantity of R&D subsidies and maintaining appropriate growth.In granting subsidies,relevant departments should do a good job in pre-examination,follow-up supervision,post-event evaluation,etc.For enterprises,they may actively apply for R&D subsidies in accordance with prescribed conditions,but at the same time they should not rely too much on R&D subsidies,but should actually use their own R&D investment as the source of motivation for sustained revenue growth.