WEI Zhihua,etc:Who Are the Winners of Fiscal Subsidies? ——An Empirical Research on Listed Companies with the Concept of New Energy

Abstract：Using a sample of 117 Chinese A-share listed companies with the concept of new energy for the period of 2010-2012, this paper empirically tests who are the winners of fiscal subsidies, the listed companies, investors or executives, so as to provide new empirical evidence to clarify the economic consequences of fiscal subsidies.We find that Chinese listed companies getting more fiscal subsidies do not have the better operating performance or higher market returns.However, higher fiscal subsidies are associated with higher executive compensation in private listed companies and lower pay-performance sensitivities for executives in state-owned listed company.The results indicate that, Chinas fiscal subsidies to listed companies are somehow inefficient, because the major beneficiaries of fiscal subsidies are corporate executives.In view of this, this paper puts forward four policy suggestions, namely, improving regulations on the fiscal subsidy policies, increasing the use efficiency of fiscal subsidy, objectively evaluating the impacts of fiscal subsidy policies on firms and scientifically formulating appraisal system of executive compensation and firms performance.

Key words： Fiscal Subsidies    Economic Consequences    Executive Compensation    Pay-performance Sensitivities

source:Finance & Trade Economics ,No.10,2015