Government Subsidies For China's Information Technology Industry Benefits Listed Companies Affected

Currently, global economic has been moved towards integration. Its developmentcan’t leave without the support of information technology (IT). The demand of informationtechnology has been higher and higher. Among the economic development of each country,IT has been paid more and more attention. Without a doubt, compared with otherdeveloped countries, China has gone through a short period of development and beenimmature in its technology progress. In order to keep pace with the global advancedtechnology, we have been constantly introduced the advanced technology, digested andabsorbed rapidly. To seek innovation, we have been tried very hard to overcome thedifficulties. Not only do we strengthen the support from the government policy, but we alsoincrease the investment in technology innovation. Our country’s innovation and reservationability has been established. It has been proved that the potential of IT development andthe dependence of our economic and social development of IT with the wide range ofapplication and development of IT.The IT industry listed companies represent the core of the industry. Theirdevelopment drives the growth of the IT industry as well as other industries which rely onit. According to the situation of gaining government subsidies, this industry has obviousadvantage. No matter the overall subsidies it gains or the extent this industry gains, it hasreached the top list. However, whether the subsidies that government gives to this industrycan improve its own operation situation and the social benefits, is a question that lots ofpeople care about and intend to research about it. This is also the purpose of this paper.This dissertation combines both normative and empirical research. The results are: inthe short-term, government subsidies are positively and significantly correlated with ROEand the number of staff per one million. Though government subsidies are positivelycorrelated with other three indexes, their relationships are not significant. From thecompanies’ characteristic view, private companies are affected more by governmentsubsidies from their ROE index. However, state-owned companies are affected more fromsocial benefits’ perspective. From time perspective, government subsidies can affectInformation Technology listed companies’ operation performance and social benefits in theshort-run, but it can’t make this influence in the long-run. From the two types ofgovernment subsidies’ view, this dissertation finds that it positively and significantlycorrelated with operation performance and social benefits in the short term with subsidiesthat are not related with research and development. For those subsidies that are related with research and development, they are positively and significantly correlated with operationperformance and social benefits in the long term.According to the current situation of IT industry development and the governmentsubsidies it has gained as well as the performance the subsidies shows, this dissertation hasproposed the following advises:1. Keep the government subsidies stable and constant;2.The government should follow the market discipline and adjust its motive of givingsubsidies to the most efficient way of allocating the resources;3. Establish and improve thegovernment subsidy evaluation system and the transparent regulation;4. The governmentshould balance its subsidy towards the state-owned and the private companies.5. Thegovernment should pay more attention and give more subsidies on the projects whichrelates to high-tech research and development.