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

In: Proceedings of the 2023 2nd International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2023)

Author

Listed:
  • Xiran Cui

    (University of International Business and Economics)

  • Lu Li

    (Tulane University New Orleans)

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.

Suggested Citation

  • Xiran Cui & Lu Li, 2024. "Improving Investment Efficiency in Enterprises: An Analysis of the Impact of Government Subsidies and Marketization Level," Advances in Economics, Business and Management Research, in: Faruk Balli & Hui Nee Au Yong & Sikandar Ali Qalati & Ziqiang Zeng (ed.), Proceedings of the 2023 2nd International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2023), pages 453-460, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-268-2_50
    DOI: 10.2991/978-94-6463-268-2_50
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