Government Subsidies, Capital Structure and Enterprise Growth An empirical study based on the new energy industry

The State Council proposed to develop the strategic emerging industries and give them some support in terms of policy in 2010. Under the policy context, this paper selected the new energy industry as the research object. Based on the panel data of the new energy industry from 2010 to 2014, we found that government subsidies had a weak positive correlation with the capital structure but a significantly positive correlation with the growth of enterprises of the new energy industry. That is to say that the government subsidies can ease corporate financing constraints to some extent and promote the development of enterprises of new energy industry. But we also found that the new energy industry was still faced with the problem of an unreasonable debt structure. So the government needs to further clear the financing channels for the enterprises. We also found an insufficient solvency of the new energy enterprises, through the analysis of corporate cash flow from operating activities. This indicates that enterprises with high growth need to pay attention to financial risks and that government subsidies for new energy industry should be sustainable.