Government Subsidies,Corporate Innovation,and Earning Persistence

Given the increasing urgency of environmental issues,China has been actively addressing environmental issues.Relying on the low-carbon nature,new energy vehicles(NEVs)are valuable in the mission of energy conservation and emission reduction,and government also pays attention to the NEV industry.Since 2009,a variety of government subsidies provide necessary funds for NEV enterprises in research and development technology innovation,and subsidies have also become an important source for the innovation and development of NEV enterprises.Depending on the feature of “technology-intensive”,the NEV industry makes full use of government subsidies to put innovation in a more prominent position and pursue the innovation-driven transformation into “electric”.Innovation is the guarantee for each NEV manufacturer to cope with the external market competition,as well as the fundamental requirement to achieve high-quality and sustainable development.Earnings persistence,as one of the indicators,to measure the company’s performance,not only reflects the current operating performance but also is an important basis for evaluating the quality of prospective profitability.The government subsidies of NEVs not only witnessed the growth of the industry,but bu also experienced the adjustment of subsidy standards and intensity.At the level of policy implementation,whether companies have followed the original intention of the state,using government subsidies properly to enhance independent innovation and achieve sustainable development,still needs to be evaluated.This paper takes BYD,the domestic leading NEV company,as an example to explore the innovation performance and surplus persistence of NEV enterprises,focusing on two questions: “How does government subsidy affect corporate innovation” and “How does corporate innovation affect surplus sustainability”.The research starts from the government subsidies received by the new energy vehicle enterprises,optimizes the innovation performance evaluation indexes in the light of the actual situation of the enterprises,and examines the intuitive impact of government subsidies on the innovation performance of the enterprises,and further evaluates the financial performance of the enterprises through the surplus persistence.The research proposes the analysis path of “government subsidies--enterprise innovation--earnings persistence”,clarifies the role of government subsidies in the internal,and evaluates the impact of subsidy adjustment on the longterm development of enterprises.The article summarizes the overall scale of government subsidies,improves the innovation performance of enterprises under government subsidies by evaluating innovation inputs and outputs and measuring their quality,as well as examines the sustainability of the surplus in three dimensions:stability,growth,and cash flow guarantee.The study finds that government subsidies affect innovation input,innovation quality,and innovation output through a “chain reaction”: BYD’s innovation performance is more sensitive to and dependent on state subsidies in the early stage,but in the later stage BYD gradually cultivates its independent innovation capability,which further promotes product innovation and increases market share,then influence the sustainability of surplus.The study expands the research perspective of government subsidies and corporate innovation,which extends the consequences of government subsidies to corporate surplus persistence.The test instruments are also extended: government subsidies are measured in terms of both promotional subsidies and corporate subsidies,and the quality of innovation is added to the innovation input-output performance.Finally,based on the analysis of surplus sustainability,the paper proposes recommendations on the use of subsidies,corporate innovation,and sustainable surplus,in order to provide suggestions for Chinese new energy vehicle enterprises to cope with the “subsidy withdrawal”.