An Empirical Study On The Signal Effect Of Government Subsidy

As an important means of national macro-economic regulation and promoting rational allocation of resources,government subsidies have important theoretical and practical significance.The article mainly studies the channel and regular of the government subsidy signal effect from the perspective of social investors.Using the2013-2017 data of A-share listed companies,the paper study the signal effect of government subsidies on guiding investor investment.The study found that companies that receive government subsidies can be followed up by social investors,verifying that government subsidies play a signalling role in guiding social investors.When the company’s profitability is questioned,Rational social capital will abandon the follow-up of government subsidies in pursuit of their own investment goals;This study result verifies the rational decision-making part of social investors’;But social investors only pay attention to the company’s surface performance,and ignore the real performance of the enterprise.That is,the hidden nature of earnings management leads to social investors being deceived by the surface performance.The accrued earnings management and real earnings management play a positive role in mediating the government subsidy signal effect.Institutional investors have more information and data analysis advantages than individual investors,and their decision-making behavior tends to be more rational.Our studies finds institutional investors also having the behavior of “free-riding”government subsidies.After obtaining government subsidies,enterprises can attract more institutional investors investment.However,for financially distressed enterprises,government subsidies are negatively related to institutional investor investment.Financial distressed enterprises are prone to government subsidies“dependency” and the phenomenon of more subsidies and worser performance,so institutional investors have reduced the number of government-subsidized enterprises.Investment follow-up.Compared with individual social investors who pay attention to the surface performance,institutional investors make more rational decisions and can identify the company’s accrued earnings management and real earnings management behavior.The empirical research finds that enterprises can’t obtain more institutional investors’ investment through accrued earnings management and real earnings management,and neither accrued earnings management nor real earnings management plays a mediating effect in the government subsidy signal effect for institutionalinvestors.There are differences in the consideration of corporate earnings management for institutional investors compared with individual investors.In the further analysis of the paper,through the classification of government subsidies,it is found that government subsidies such as project construction,support funds,tax rebates,and research and development grants can generate significant investment guidance signals for social investors’ behaviors,while financial interest subsidies and incentive funds haven’t played a significant guiding signal,indicating whether the government subsidy can exert its signal effect by factors such as transparency,fairness,scale and frequency of subsidies.According to the industry classification,the stduy find that the listed companies in the primary industry have not exerted a significant signal effect on social investors after receiving government subsidies.The listed companies in the tertiary industry have not produced significant effects on institutional investors after receiving government subsidies.The significance of the research is to improve the study on the signal effect of government subsidies.It is found that social investors have rational and irrational behaviors when they follow up on government subsidies.From the perspective of investor decision-making,the decision-making path of social investors to follow up on government subsidies is enriched.It provides a new research perspective for the evaluation of the effectiveness of government subsidies.