Improving Investment Efficiency in Enterprises: An Analysis of the Impact of Government Subsidies and Marketization Level

Xiran Cui () and Lu Li ()
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Xiran Cui: University of International Business and Economics
Lu Li: Tulane University New Orleans

A chapter in Proceedings of the 2023 2nd International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2023), 2024, pp 453-460 from Springer

Abstract: Abstract This paper examines the effect of government subsidies and the level of marketization on investment efficiency in Chinese A-share manufacturing companies that are listed on the Shanghai and Shenzhen stock exchanges from 2012 to 2022. Using panel data analysis, we investigate the underlying mechanism of these relationships. The findings reveal that when listed companies experience inefficient investment, government subsidies exacerbate overinvestment and enhance investment efficiency. However, for companies facing underinvestment, government subsidies bridge the capital gap but reduce investment efficiency. Moreover, regions with higher levels of marketization exhibit lower dependency on government subsidies and experience fewer instances of inefficient investment.

Keywords: government subsidies; Investment redundancy; under-investment (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-268-2_50

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DOI: 10.2991/978-94-6463-268-2_50

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