Study On Local Government "Shell Protection" Behavior

In recent years,the Chinese government has paid more and more attention to the expansion of direct financing channels for enterprises.From the opening of the science and innovation board in June 2019 to the registration system reform in 2020,the problem of "difficult listing" of enterprises has been gradually solved,but the problem of "difficult delisting" is still serious.Many pharmaceutical companies have adopted the method of "withdrawing from the market",which has become a "negative signal" for the government to avoid the "withdrawal from the market" of many pharmaceutical companies,which will also bring a strong "negative impact" on the market.From 2007 to 2021,the government helped more than 230 enterprises "protect their shells" through subsidies and tax incentives for reasons such as political achievements and promoting people’s livelihood security.The government’s participation in the "shell protection" is a neutral event,which can help enterprises or emerging technology industries with short-term losses caused by adverse market environment out of difficulties.However,if the "shell protection" object is enterprises without sustainable operation ability and no hope of turning losses,it will be more dependent on the government,which will also lead to the sluggish delisting process and is not conducive to the optimal allocation of resources.Therefore,the government’s "shell protection" behavior is worth exploring.Taking Nanning Sugar Industry as a case,this paper studies the "shell protection" behavior of local governments,and tries to provide some suggestions on how to standardize the "shell protection" behavior of the government to promote the healthy development of the capital market.Firstly,this paper theoretically combs the motivation,mode and economic effect of the government’s "shell protection",and then summarizes the characteristics of the government’s "shell protection" behavior and the current situation of delisting in each stage of the implementation of China’s delisting system.Thirdly,in order to recognize the general facts causing the formation of the "shell protection" phenomenon as a whole and verify whether the theoretical analysis results are universal,this paper makes an empirical analysis on the influencing factors of the government’s "shell protection" behavior by using probit econometric model.Finally,with the help of the cognition of general facts obtained from quantitative analysis,this paper further takes "Nanning Sugar Industry" as a case to more deeply describe the "shell protection" behavior of local governments,focusing on the judgment of the rationality of * ST South sugar’s "shell protection".The empirical analysis and case analysis of this paper show that whether st enterprises are state-owned holding,enterprise scale,industry nature,contribution to local economic development(such as tax and employment),and the scarcity of regional "shell" resources constitute important factors for local governments to choose to participate in "shell protection".The ways of government "shell protection" mainly include government subsidies,tax incentives,asset restructuring and bank credit support.This paper analyzes the rationality of * ST South sugar government’s "shell protection" behavior,and finds that Nanning Sugar Industry has a great impact on the economic development of Guangxi,which plays an important role in local fiscal revenue,livelihood security,employment and industrial chain.Based on the above reasons,Nanning municipal government’s participation in enterprise "shell protection" is reasonable.However,the operating conditions of Nanning sugar industry have not been effectively improved after the "shell protection",but have further deteriorated.The company’s losses are mainly caused by the decline of sugar price at the sales end and the increase of raw material cost,indicating that the company has no reasonable cost transfer.Moreover,there are deficiencies in the way of "shell protection" of Nanning municipal government,and the way of direct capital injection should not be used too much.Therefore,this paper believes that the "shell protection" motivation of Nanning local government is reasonable to a certain extent,but the way of "shell protection" needs to be carefully selected.Finally,the conclusions and suggestions of this paper are as follows: first,for those enterprises that are poorly managed due to market competition and their own internal structure problems,enterprises that are in recession or highly saturated and need to be eliminated,enterprises whose net assets have been negative for many years and are close to bankruptcy,and enterprises that have been rescued by the government for many years and still have long-term losses,the government should not participate in the "shell protection" and should make them retreat if they should.Second,if the st enterprise is very important to local economic development,it can promote employment and increase taxes,and the "shell resources" in the region where the enterprise belongs are relatively scarce,or the enterprise has a high position and contribution in the industrial chain,and is highly related to people’s livelihood.It is reasonable for local governments to "protect the shell" of such enterprises to a certain extent,but local governments should carefully choose the appropriate way of "protecting the shell".Third,local governments should not only "protect the shell" through simple capital injection,but should guide enterprises to innovate technology and products,reasonably control costs,and realize "multi legged" walking.Fourth,enterprises should actively strengthen their own business management and governance,should not rely too much on government relief,and should make efforts from within themselves to enhance the ability of sustainable operation.