The Impact Of Government Awards On Enterprises

Building a reasonable and orderly government-enterprise relationship and creating a fair and competitive market environment are inherent requirements of China’s current high-quality economic development.To this end,China has been committed to promoting the reform of optimizing the business environment,constantly reducing improper government intervention in the market,and promoting a better combination of "effective market" and "promising government".However,while the government’s restrictive behaviors on market players are decreasing,the incentive behaviors are increasing at the same time.This thesis takes the evaluation of China Quality Award(CQA)as the research subject to study its possible impact on enterprises.Theoretical analysis believes that obtaining CQA can bring additional benefits to enterprises,and during the application process and after winning the award,enterprises can also obtain more government subsidies through political connection and signal transmission,so enterprises have sufficient motivation to take actions for the goal of winning,namely the subsidy effect.Enterprises may take different actions due to the motivation.On the one hand,the evaluation of CQA may incent enterprises to comprehensively improve their management level and capabilities;but on the other hand,enterprises may also cater to the evaluation criteria and modify their business performance,thereby gaining a competitive advantage in the evaluation process.According to the different actions taken by enterprises,we divide them into incentive effect and catering effect.In order to verify these three possible effects,we use the one-by-one verification method to obtain the information of award-winning enterprises over the years,and matches it with the corporate governance data,financial data,and innovation data of listed manufacturing enterprises.Finally,we get a complete panel data with a time span of 2008-2019.Subsequently,we establish a two-way fixed-effect model to empirically test enterprise motivation indicators,productivity indicators,financial performance indicators,innovation indicators and catered indicators,and alleviates the endogeneity problem by means of multiplicative regression.The regression results show that after winning the award,government subsidies received by enterprises have increased significantly,which supports the subsidy effect.In addition,both productivity indicators and financial performance indicators have decreased significantly,innovation indicators have not been significantly affected.The results support the catering effect,but not the incentive effect.The robustness tests by using propensity score matching,controlling industry variables,placebo test and using China Enterprise General Survey(CEGS)data all show that the regression results are robust.The dynamic effect intuitively shows that the enterprises have carried out significant positive earnings management before winning the award,resulting in a significant improvement in business performance.The result of the time effect shows that,as time goes by,the award-winning enterprises have received more government subsidies,but in the long run they have achieved worse business performance,which means that the evaluation of CQA may lead to the misallocation of government subsidies resources.There are regional and scale heterogeneity in the catering behavior of enterprises,and it appears more prominently in the western of China where the degree of marketization is low,and in enterprises with large scale and high profitability.This thesis has certain policy implications for the CQA itself and the deepening of the reforms to delegate power,streamline administration and optimize government services.First,it is necessary to strengthen the top-level design of the CQA,such as the post-event supervision and the system of indicators.The second is to clean up and standardize the "red lists" set up by the government to reduce the government’s intervention in the market.