Government subsidies and corporate investment efficiency: Evidence from China

How State Supports Investments: Case of Russian Federation

“…Special attention is devoted to the role of tax benefits and allowances in stimulation of investment activity. (Jinshuai, Jiang & Holmes, 2019). The point is made that a careful choice of subsidies' recipients is especially important because these measures are most successful only if the companies have a lack of financial resources.…”

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“…Besides, some scholars point out that the government will also promote . Scholars with the opposite view believe that companies receiving government subsidies may focus more on political gains rather than economic benefits, resulting in excessive production and efficiency losses, and affecting the development of companies (Beason and Weinstein, 1996;Bergström, 2000;Tzelepis and Skuras, 2004;Howell, 2017;Hu et al, 2019). Some scholars believe that government subsidies do not directly affect the sales of companies, but government subsidies make an indirect contribution to company sales by improving technology .…”

“…Government subsidies are often measured by the natural logarithm of the total amount of government subsidies (Wu and Hu, 2020) or public expenditure for encouraging R&D and protection activities for industrial intellectual property (Sung, 2019). Hu et al (2019) use the government subsidy amount reported under the non-operating income on the Statement of Financial Performance and divide it by the total assets as the indicator. Zhang and Guan (2021) choose the government subsidy amount in the annual report data of listed companies as the indicator.…”

“…According to the study of Hu et al (2019) and Yang et al (2019), this paper constructs the regression model (1) as below to test the impact of technology innovation on FS. Referring to Ben-Akiva and Lerman (1985), this paper constructs the regression model (2) to test the effect of technology innovation on SES:…”

“…Some scholars consider that government subsidies are common tools to reduce the loss of private profits brought by technology spillovers and encourage companies to increase R&D investment (Batlle, 2011;Zhang et al, 2014;Su and Zhou, 2019). Nevertheless, government subsidies can also inhibit the development of companies, because government subsidies may focus more on political gains rather than economic benefits, resulting in excessive production and efficiency losses and affecting the development of companies (Beason and Weinstein, 1996;Bergström, 2000;Tzelepis and Skuras, 2004;Howell, 2017;Hu et al, 2019). The second objective this paper aims to accomplish is to explore what role the government subsidies play between technology innovation and corporate sustainability.…”