{"title":"Government subsidies and managerial slack: Evidence from China","authors":"Haiyan Jiang , Kun Su , Ahsan Habib","doi":"10.1016/j.jcae.2025.100473","DOIUrl":null,"url":null,"abstract":"<div><div>This paper examines the association between government subsidies and firm-level managerial slack for a sample of Chinese listed firms over the period 2005–2018. Managerial slack is the excess spending, compensation, and perquisites consumed by managers at the expense of shareholders’ wealth. Measuring managerial slack as the abnormal administrative expenses following Fang, He, and Conyon (2018) and Fang, He, and Shaw (2018), we find that government subsidies are positively associated with firms’ managerial slack. This positive association, however, is attenuated for firms with strong internal control and firms headquartered in regions with a high level of social trust. Further analysis demonstrates that the positive association is driven by firms receiving non-tax-related government subsidies. Our main result remains robust after addressing endogeneity concerns. Finally, we show that the stock market penalizes subsidy-receiving firms with high managerial slack.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 2","pages":"Article 100473"},"PeriodicalIF":2.9000,"publicationDate":"2025-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Contemporary Accounting & Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1815566925000207","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This paper examines the association between government subsidies and firm-level managerial slack for a sample of Chinese listed firms over the period 2005–2018. Managerial slack is the excess spending, compensation, and perquisites consumed by managers at the expense of shareholders’ wealth. Measuring managerial slack as the abnormal administrative expenses following Fang, He, and Conyon (2018) and Fang, He, and Shaw (2018), we find that government subsidies are positively associated with firms’ managerial slack. This positive association, however, is attenuated for firms with strong internal control and firms headquartered in regions with a high level of social trust. Further analysis demonstrates that the positive association is driven by firms receiving non-tax-related government subsidies. Our main result remains robust after addressing endogeneity concerns. Finally, we show that the stock market penalizes subsidy-receiving firms with high managerial slack.
本文以2005-2018年中国上市公司为样本,研究了政府补贴与公司层面管理懈怠之间的关系。管理懈怠是指管理者以牺牲股东财富为代价而消耗的超额支出、薪酬和额外福利。继Fang, He, and Conyon(2018)和Fang, He, and Shaw(2018)之后,我们将管理松弛作为异常管理费用来衡量,发现政府补贴与企业管理松弛呈正相关。然而,对于具有强大内部控制的公司和总部位于社会信任度高的地区的公司,这种积极联系减弱了。进一步分析表明,这种正向关联是由企业获得与税收无关的政府补贴所驱动的。在解决内生性问题后,我们的主要结果仍然强劲。最后,我们证明了股票市场对高管理松弛度的接受补贴的公司进行了惩罚。