Xu Jiahui

Despite a large number of government subsidies, Chinese listed companies still face numerous challenges. This requires research into the effects of government subsidies on corporate investment efficiency. The paper provides empirical evidence to investigate investment efficiency and enriches the study on the interactions between government intervention, rent-seeking, and ownership structure. Generalized least square (GLS) models with fixed effects were constructed using 2012–2020 data from 869 Chinese listed A-share non-financial firms. Results show that government subsidies received by listed companies significantly damage investment efficiency (β = .138, p < .01). This can be attributed to their rent-seeking behaviors to obtain subsidies, which also significantly harms investment efficiency (β = .915, p < .05). Government subsidies are also found to significantly mediate the impact of rent-seeking on investment efficiency. In three-step regression for testing mediating effect, coefficients are 0.475, 0.915, and 0.131 at the level of 1%, 5%, and 5%, respectively. Furthermore, ownership structure shows a moderating effect in the relationship between subsidies and investment efficiency. The management shareholding ratio significantly reinforces the negative impact (β = 1.369, p < .01), while the institutional shareholding ratio shows no significant moderating effect (β = 0.0571, p = n.s). Non-state-owned enterprises show a more significant negative impact (β = 0.17, p < .05) than state-owned enterprises (β = 0.148, p < .1). Finally, the study tests the above relationships for companies in the manufacturing industry that receive the most percentage of government subsidies in China, and the results are robust.