A Study On The Effect Of Government Subsidy On The Value Of Listed Companies With Negative Interests

According to statistics, government grants behavior has increased every year since 2000, Whether subsidies amount or coverage have improved more significantly compares with earlier decade. The behavior that government gives the subsidy to companies is essentially intervention in the market, it is one of the basic means to macroeconomic regulation and control and balance the market risk. Especially for loss companies, government subsidy is a common phenomenon in the market. Listed companies who gets government subsidies has great significance, it can make the company achieve paper earnings at some critical moments and avoid the risk of been delisted. Local governments tend to help financially troubled listed company, this is in order to protect the local listed companies. With the prosperity of the market economy, the number of firms increases year by year, and loss phenomenon is also common. So whether subsidies can improve management present situation of the company which is negative owner’s equity? What is the effect of subsidies to the value of a listed company?In this paper, the author analyzes function about the government subsidies to the value of the company after reviewing the related literature about the domestic and abroad, then choose 62 listed companies from shanghai and shenzhen stock exchange who has negative equity losses and obtain the government subsidies during the next five years since 2009, research the sample’s value after receiving government subsidies within five years, and analyze its solvency and profitability and development capacity change. At the same time, the writer analyses the influence of government subsidy to company’s value who has negative equity losses, and to test, to analyze correlation and regression to verify this hypothesis.The results are as follows:(1) It has no significant influence about the government subsidies to the sample’s market value, but the government subsidies on its Tobin Q value is significant, and short-term effect is obvious to the long term, with the increase of time, subsidies for the value of the company cannot become increasingly obvious. (2) the government aid for negative equity losses of listed companies is given priority to direct subsidies, which cause the cash inflow. Although subsidies will enhance the company’s net cash flow, that is only balance the part of the loss and does not promote performance improvement. Government subsidies improves its solvency slightly, and has not significant impact on development ability and profitability about short-term and long-term. Negative equity losses of the shell value of listed companies has a significant influence on the value of the company, meanwhile,the enterprise value and value of shell were positively correlated. In other internal factors, the existence of the state-owned shareholding and industry factors have no significant correlation to its value.For this article research conclusion, the writer puts forward the following suggestions:(1) from the perspective of macro regulation, government subsidies should further standardize and improve local government performance evaluation system, to avoid benefits behavior "flood", make subsidies really return to against the risk point of view. (2) from the perspective of listed company development, losses, delisting is normal phenomenon, the company’s value is the value of its existence, and for those who had been eliminated by the market, poor management of the listed company, to go to the market to digest. (3) from the accounting point of view, should be further optimized included in the classification of government subsidies, to prevent the listed company from using government subsidies to turn round "ST", and even operating profits. (4) we should relax the entrance of listed companies, and speed up the implementation of the registration system of listed companies in order to promote the good ecological cycle in the market, because it is beneficial to the company’s financing problem, and can slow the subsidy of government financial pressure.