Government Innovation Subsidy and Executives Entertainment Spending Perks Considering the Effect of External Governance and Positive Emotion

Abstract

Abstract:

This paper sheds light on the impact of government innovation subsidy on executive entertainment spending behavior. On the one hand, government plays its role in corporate governance by implementing subsidy funds management policy, supervising the operation of companies and suppressing executives' self-entertainment consumption, and this is called "external governance effect". On the other hand, the positive news of government innovation subsidies give rise to positive emotions, which lead executives to have an impulse to entertainment consumption, and this is called "positive emotional effect". We take A-share listed high-tech Chinese firms from 2009 to 2014 as the sample, to explore the real effect of government innovation subsidies in the context of the transition economy. The study demonstrates that the higher the intensity of government innovation subsidy, the higher the level of executives' entertainment consumption, that is, the positive emotional effect is significantly pronounced. What's more, this effect is more pronounced in the non-state-owned companies after the implementation of the "post-subsidy" policy in 2013, and the positive emotional effect is significantly mitigated in the sample of state-owned companies, which can be interpreted as the political environment is improved after the important event of the 18th Congress, the positive emotion is effectively inhibited and the external governance level is enhanced by anti-corruption in state-owned enterprises. This paper has important policy implications in enhancing the external governance level of government innovation subsidy and reducing the agency cost of companies against the backdrop of constructing a new government-enterprise relationship.

Key words: government innovation subsidy, executives' entertainment spending perks, high-tech companies, external governance, positive emotion

Peng Hongxing, Mao Xinshu, Zhang Yin. Government Innovation Subsidy and Executives Entertainment Spending Perks Considering the Effect of External Governance and Positive Emotion[J]. , 2020, 32(3): 122-135.

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