The Impact Study Of Government Subsidy On Company Results Under Political Connections

The government subsidy is the ubiquitous phenomenon in the world,and is a means that the government intervenes in the production and operation activities of enterprises.It is not uncommon for the government to provide various types of subsidies for ST listed companies facing difficulties in their business operation in china.The scale of government subsidies in China is huge,the efficiency of circulation of the government subsidy arouses extensive attention from all sectors of society.Therefore,The relationship between the government subsidy and company performance is also a hot issue among scholars.In addition,in the context of China's special economic transformation and political system,the political connections prevail in China's state-owned and private enterprises.This paper has regarded data of ST listed companies receiving government subsidies in Shanghai and shenzhen from2010 to 2015 as samples and verified the effect of the government subsidy on the company performance from the perspective of political relevance.The company result is analyzed from the short term and long term respectively.The measures are the total return on assets(ROA)and the growth rate of operating income(IOR).According to this research,we found that the government subsidy can play a driving role in the company performance in the short term,but it can't help the company result in the long run.This suggests that the incentive for ST companies to receive the government subsidies may be to turn theirs around and keep the listing qulification,so it does not make good use of the subsidies provided by the government.After distinguishing whether companies have political connections,we found that the improvement of the government subsidy to the ST company performance with political connections is better than those of non-political connections.This is because pollitically connected ST companies have closer ties to the government.They can have an advantage in the acquisition of relevant information and enjoy more political assistance.Driven by the Herd-flock Effect in the market,moreover,the acquisition of the government subsidy will drive the inflow of other social resources into ST companies.These will have a positive impact on the company performance.The innovation of this paper is mainly reflected in research perspective.That is to say,the relationship between government subsidy and the performance of ST companies was studied from the perspective of political connections.This is a new perspective and can expand new ideas for research objects.We must strengthen macro management and increase the efficiency of government subsidies.we need to standardize the use and disclosure of the government subsidy,further improve the delisting system of listed companies,regulate government-enterprise relationship and create a fair competitive environment.