Corporate Financial Investment : A Response to Government Subsidies

With data on Chinese Listed firms, I study the dynamics between government subsidies and financial investment. The findings elucidate a deviation exhibited by managers in terms of their proclivity for financial investment subsequent to the reception of subsidies. By employing deep neural networks, I reveal that regardless of the magnitude of the subsidies, corporate financial investment decreases by a substantial amount. Heightened risk levels also provoke a greater reduction in financial investment. Lastly, the most pronounced negative effects of government subsidies are observed within privately-owned service industry firms