The impact of government subsidies on corporate resilience: evidence from the COVID-19 shock

In the face of complex and changeable uncertain environments, corporate resilience is the crucial foundation for survival and sustainable development, and enhancing corporate resilience becomes an important goal for governments. In this context, this paper investigates the impact of government subsidies, as a typical government tool, on corporate resilience in crises. Based on the panel data of 2315 listed companies in China Shanghai and Shenzhen A-share market during the COVID-19 pandemic, this paper finds that: (1) government subsidies received before and during the crises can both enhance corporate resilience in crises. (2) Government subsidies enhance corporate resilience by alleviating financial constraints and boosting confidence. (3) The crises improve the efficiency of subsidies used by corporates, resulting in the enhancement of subsidies received during the crises being more pronounced than those received before the crises. This paper deepens the understanding of government subsidies' roles in crises, enriches the literature on government subsidies and corporate resilience, and provides a reference for improving government subsidies policy and enhancing corporate resilience. The government should increase government subsidies to mitigate the negative impact of uncertainty shocks on corporates and improve corporates' ability to respond to risks, and pay attention to the timing of subsidies to maximize the efficiency of government subsidies at the same time.