연성예산제약이 상장기업 부실에 미치는 영향 -중국기업을 대상으로 한 사례 연구-

This study empirically analyzes how the soft budget constraint(SBC) affects Chinese firms' default risks. With Chinese firm-level data, we first investigate a commitment to bail poorly performing firms out possibly due to political or socialistic reasons. We further study how SBC affects firms' profitability and default risks on firms that receive government subsidies. We identify government subsidies in the forms of cash and tax exemption or refund as major sources of soft budget. Our results are following: (1) In the year of soft budgeting, subsidized firms underperform in terms of profitability, and the level of underperformance is greater for firms receiving cash subsidies than those with tax benefits. (2) Those subsidized firms show lower default risks measured by Altman's z-score, with tax benefits having greater effects than cash subsidies. (3) We find that during the period of government subsidization, firms with relatively high risk show worse profitability and higher default risks than the period without subsidization. We infer from the empirical results that the subsidies by the Chinese government are the examples of SBC phenomena, believed to exist in socialistic countries. The culprits of such problem may result in irresponsible and immoral behaviors by corporate managers in China, thus the inefficient use of softly budgeted resources. We further argue that such SBC problems may turn out to be significant if Chinese economic situation aggravates in the near future.