Government Subsidies and Capital Allocation of Strategic Emerging Industries——An Empirical Study Based on Samples of Listed Companies
ZHAO Tian-yu1,XIU Jing2
1. Department of Economics and Trade,Henan Institute of Technology, Xinxiang 453003, China; 2.Economic Research Institute, Jilin Academy of Social Sciences, Changchun 130033, China
Abstract：
Based on the theoretical projection that intervention of government subsidies will affect capital allocation efficiency of strategic emerging industries through multiple mechanisms, this paper builds an investment model on top of mathematical analysis and carries out an empirical test on the effects and mechanism through which government subsidies affect the capital allocation efficiency. Results show that there are different mechanisms for enterprises in efficient groups and inefficient groups when subsidies get involved in financial markets. When subsidies go to the equity market, it aggravates capital constraint on efficient group, but provides more substantial financial support to the inefficient group.When the subsidies go into the credit market, the signaling effect is obvious which helps boosting capital allocation efficiency of the efficient group who takes up 75% of all enterprises. But combined with equity financing, it will lead to blind investment in the inefficient group who takes up the other 25%. The uncertainty of the subsidies intervention in the market weakens all the enterprises’innovation initiative, which can hinder their development towards a high end.There is heterogeneity among industries in the effect of subsidies in that policy dependence occurs in some industries.
ZHAO Tian-yu,XIU Jing.Government Subsidies and Capital Allocation of Strategic Emerging Industries——An Empirical Study Based on Samples of Listed Companies[J] Economic Survey, 2017,V34(6): 87-92
2017 
