Research On The Impact Of Government Subsidies On The Profit Status Of Listed Companies

In order to promote economic development and support specific industries,the state will grant certain government subsidies to specific enterprises.Government subsidies reflect the government’s resource allocation to enterprises.The original intention is to repair“market failure”and protect specific industries.However,in the practical application of government subsidies,many listed companies only use government subsidies to whitewash their performance and turn losses into profits by government subsidies,instead of investing in R&D and innovation.As a result,the information asymmetry between government and enterprises leads to a waste of resources,weakening the incentive effect of government subsidies on innovation.In recent years,the coverage of government subsidies to listed companies and the total amount of government subsidies have been increasing.With the“13^th five-year plan”regarding innovation-driven development as one of the main goals,the electronic information industry has also become the main direction of government subsidies.Based on analysis of the current status of government subsidies to listed companies in the A-share market,manufacturing,computer,communication,and other electronic equipment manufacturing industries from 2009 to 2018 and their proportion in the total profits,this paper finds that with a large amount of government subsidies,the intention of enterprises to use government subsidies for whitewashing their performance is becoming increasingly apparent.The high coverage of government subsidies in the electronic information industry reflects the country’s policy preference,however,companies in the industry have not shown better profit performance.Moreover,the use of government subsidies to make up for losses is even more serious.After conducting a case study of both the mechanism of government subsidies and the effects of government subsidies on profitability and R&D innovation in Huadong Technology CO.,Ltd,this paper indicates that the R&D expenditure and patent number of enterprises have a synchronous change trend with the input of government subsidies,which promotes R&D innovation in a certain level.However,it is difficult to monitor the flow direction of subsidies with no specified the direction of use.These government subsidies play a greater role in whitewashing performance than improving operating ability and profitability.Therefore,despite a large amount of government subsidies as performance protection,enterprises still need to grasp the main business development,actively carry out R&D innovation,promote the transformation and upgrade of the industry,and reduce the dependence on government subsidies.The relevant government departments need to improve the government subsidy granting mechanism,establish an open and transparent subsidy qualification review mechanism,carefully select enterprises for precise subsidies,introduce the third-party audits to strengthen the supervision of the use of government subsidies by enterprises and establish a feedback mechanism for the use of government subsidies to ensure the effectiveness of government subsidies policies.