Research on the Impact of Government Subsidies on the Investment Efficiency of Enterprises

DOI

10.2991/978-94-6463-408-2_30How to use a DOI?

Keywords

Investment efficiency; Over-investment; Government subsidies; Panel regression

Abstract

In the context of governmental involvement in market operations, subsidies represent a crucial instrument for macroeconomic regulation and the reallocation of societal resources. Given the significance of macroeconomic policies on micro-level enterprises as well as corporate governance structures, this paper tries to explicate the specific association between governmental financial support and the amplification of firm value. As a matter of fact, enterprise investment efficiency stands as a salient metric reflecting the intrinsic value of an enterprise, and during the epoch of economic metamorphosis in China, a prevalent condition of suboptimal investment, encompassing both under-investment and over-investment, is observable among publicly-listed corporations. Considering that existing studies have largely overlooked the intricacies of the relationship between government financial subsidies and corporate investment efficiency within the unique institutional milieu of China, this research employs a comprehensive empirical examination of non-financial firms listed on the Shanghai, Shenzhen and Beijing A-share markets over the interval spanning from 2010 to 2021 to address this gap. The findings reveal that government subsidies do affect corporate investment effectiveness, with varying degrees of effectuation observed across different types of companies. Specifically, government subsidies possess the capacity to mitigate instances of corporate under-investment, while such financial incentives may also have the potential to intensify problems associated with corporate over-investment. Notably, these effects are more pronounced within the subset of non-state-owned enterprises.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Zeyu Zhao
PY  - 2024
DA  - 2024/05/07
TI  - Research on the Impact of Government Subsidies on the Investment Efficiency of Enterprises
BT  - Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024)
PB  - Atlantis Press
SP  - 265
EP  - 273
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-408-2_30
DO  - 10.2991/978-94-6463-408-2_30
ID  - Zhao2024
ER  -