 Do Investors Pay a Premium for Corporate Government Subsidy? Role of China's Strategic Emerging Industries Policy and Political ConnectionsYan Yang, Yuqian Wang and Shou Chen Research in International Business and Finance, 2022, vol. 60, issue C Abstract: This study examines how investors react to the announcements of corporate government subsidy in China. We find that investors are not generally optimistic about firms’ acquisition of government subsidies, even R&D subsidies. However, government subsidies announced by firms in the coverage of the national strategic emerging industries (SEIs11SEIs stands for strategic emerging industries.) policy get better reactions from investors, which are pronounced only for non-relief and R&D subsidies. Corporate political connections counteract the improving effect of the SEIs policy coverage on investors’ perception of government subsidy announcements. We conclude that the market reaction to government subsidy announcement is conditional on whether the firm is in the industry supported by the national industrial policy and whether the subsidy is obtained in a normal way instead of by rent-seeking. Keywords: Government subsidy; Strategic emerging industries policy; Political connections; Market reactions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:60:y:2022:i:c:s0275531921001902 DOI: 10.1016/j.ribaf.2021.101569 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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