Government subsidies, dividend and stock market refinancing of Chinese firms

I show that government subsidies facilitate recipient firms' dividend payout and stock market refinancing in China where there is a mandatory requirement of cash dividend payout for listed firms intending to make seasonal equity offerings. These effects are particularly strong among more financially constrained firms. Although seemingly counter-intuitive, we show that subsidized firms are more likely to make seasonal equity offerings. My findings shed some light on the joint effects of public subsidies and corporate governance policies in emerging market setting.