The Effect Of The Government Subsidy On The Capital Of Cost From The Perspective Of Ownership

The government subsidy is an important means to solve the problem that the market does not play a role and encourage specific industries and regions.It plays an important role in the allocation of economic resources and the adjustment of industrial structure.The government subsidy has become an important means of regulating economy and has a significant impact on the macro economy.However,from the view of micro economy,the current domestic and foreign scholars did not make a unified conclusion on the impact of the government subsidy on corporate value.As we all know,the cost of capital can measure the value of an enterprise.Hence this paper explores the effect of government subsidy from the perspective of the capital of cost.Firstly,this paper summarizes the related literature of the government subsidies home and abroad.We discover that there are different views on the government grants.At the same time,the indicators of enterprise value are often only related to accounting value or market value.The capital of cost is not used to research the influence on the government subsidy.Therefore,this paper explores the impact of government subsidy on the capital of cost and tries to find that the different nature of ownership has effect on the government subsidy on the capital of cost.Secondly,we select A-share listed companies during 2007-2014 as samples to analyze the present situation of government subsidy in China.We find that the government subsidy of China is huge and has a wide scope of coverage.However,the distribution of government subsidies is unbalanced and the government subsidy of listed companies has a greater difference.Second,government subsidies accounted for a larger proportion of the profit of listed companies.Third,from the point of industry,government subsidies of state-owned enterprises are significantly more than non-state-owned enterprises,what is more the intensity of government subsidies which the central state-owned enterprises are obtained is also significantly higher than the local state-owned enterprises.Fourth,from the point of ownership,the government subsidy of state-owned enterprises was significantly higher than that of non-state-owned enterprises,and central state-owned enterprises have higher government subsidies than local state-owned enterprises.Fifth,from the perspective of the cost of capital,the listed company firstly shows downward trend and then shows upward trend.What's more,the cost of capital shows downward trend in the end.From the perspective of the nature of ownership and the cost of capital,the cost of capital about state-owned listed companies is lower than non state-owned listed companies.Thirdly,this paper combines theoretical analysis with empirical research to study the correlation of ownership,the government subsidy and the capital of cost.We draw the following conclusion: First,the intensity and scale of government subsidies which state-owned enterprises receive are higher than non-state enterprises.Second,government subsidies have significant negative correlation of the capital of cost.This means government subsidies can reduce the level of the capital of cost significantly.Third,the government subsidies of central state-owned enterprises have positively related to the capital of cost.The government subsidies of local state-owned enterprises and non-state enterprises have significant negative correlation of the capital of cost,but the role of government subsidies in non-state enterprises is higher than local state-owned enterprises.Finally,according to the empirical results,this paper puts forward to the corresponding suggestions.Firstly,it is necessary to establish the mechanism of the government subsidy such as the guidance of the government subsidy,the supervision of the government subsidy and the evaluation of the government subsidy.Secondly,the government needs to treat different nature enterprises fairly and establish fair mechanism of the government subsidy.Thirdly,state-owned enterprises should carry out mixed ownership reform and establish financial function of government subsidy of state-owned enterprises.