Abstract:
This paper mainly investigates the relationship between the equity investment of the listed companies and the government subsidies they can receive, based on the data from 2007 to 2014 of those companies listed on the Shanghai and Shenzhen stock exchanges.First of all, our research shows that the more equity investments a company has, the more government subsidies it will get.Secondly, we also find that state-owned companies can have more government subsidies if they have the same amount of the equity investments as private companies, Thirdly, the companies in the area with lower market-based degree can receive more government subsidies if they have the same amount of the equity investments as the companies in the area with higher market-based degree. In the further regression, we find that the subsidies received through equity investment will further dampen the performance of the companies. This paper explains the listed companies’ investment behaviors in an enterprise rent-seeking way, and giving a valuable reference to the rationality of the use of economic control by regional governments.
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