Study On The Current Situation And The Economic Consequences Of The Government Subsidy Of China’s Listed Companies

The relationship between the government and the market is an eternal theme of economic development, and it is always the research focus of scholars. The "Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform", adopted at the Third Plenary Session of the18th Central Committee of the Communist Party of China proposed that "The reform of the economic system is the focus of deepening the reform comprehensively. The underlying issue is how to strike a balance between the role of the government and that of the market, and let the market play the decisive role in allocating resources". Because of the intricate relationship between the government and the listed companies, the government always intervenes the operation of the listed companies. The government subsidy is one of the means of direct government intervention in the economy, which as a way to compensate for market failure and support specific industries and regions, has a significant impact on the allocation of the national economic resources and the national income, the improvement of the efficiency of the fiscal expenditure, and the optimization of the economic structure.Firstly, this paper summarizes the related literature relating to the government subsidies horrie and abroad. Followed by, selecting all A-share listed companies during2007-2012after the implementation of the new accounting Standard for Business Enterprises as samples to make descriptive statistics according to the years, industries and regions. The results showed the following current situation of government subsidies of China’s listed companies:first, the huge amount of government subsidies has a wide range, second, there is a large difference in the intensity of the government subsidies between different listed companies, third, the government subsidies received by listed companies is continuous but not stable, fourth, the government subsidies is a large proportion of profit of listed companies, fifth, the government subsidies is concentrated in some industries and regions, and there is a big gap of the distribution of government subsidies between industries and regions. For example, from the industry distribution, the government subsidies received by the emerging industries is small compared to the traditional industries, from the regional distribution, the government subsidies received by the east coastal relatively developed region is large compared to the central and western regions of China. The analysis of the current situation of government subsidies received by listed companies showed that listed companies received a large amount of government subsidies. This paper selects the transmission of information, software and IT services industry and the mining industry to study the economic consequences of government subsidies, and makes the following two assumptions:first, government subsidies for information transmission, software and IT services industry has a significant role in promoting the ability of development of the listed companies in the industry, second, the government subsidies for the mining industry has a significant role in promoting the operating performance of listed companies in the industry. Empirical studies showed that the government subsidies for information transmission, software and IT services industry did not significantly improve the ability of the development of the listed companies in the industry, the government subsidies for the mining industry reduced the operating performance of listed companies in the industry, the large amount of the government subsidies did not achieve its intended policy objectives. Finally, this paper makes relevant recommendations, the government intervention should be standardized and the government subsidies should be appropriate restricted in terms of the fiscal policy, the disclosure of government subsidies and the relevant laws and regulations should be improved in terms of standards and regulations, the CPA audit and the fiscal audit of government subsidies should be strengthened in terms of supervision.