Natural Hazards

, Volume 95, Issue 1–2, pp 241–256 | Cite as

Do subsidies improve the financial performance of renewable energy companies? Evidence from China

  • Zhishuang Zhu
  • Hua LiaoEmail author
Original Paper


The promotion of renewable energy cannot be separated from the support provided by government subsidies. However, the effect of government subsidies is controversial. Taking China’s listed renewable energy companies as examples, this paper analyzes the impact of government subsidies on the financial performance of these companies. The results show that government subsidies do not promote improvements in corporate financial performance, and renewable energy companies are less profitable than other companies. The negative effect of government subsidies on corporate financial performance can be explained mostly by the rent-seeking behavior of firms. The occurrence of subsidy-induced overcapacity and adverse selection and moral hazard created by asymmetric information also weaken the incentive effect of government subsidies to some extent.


Renewable energy Government subsidies Rent-seeking behavior Overcapacity Asymmetric information 



This work is supported by funding from National Natural Science Foundation of China (Nos. 71673026, 71642004, 71521002, 71322306, 71273027), China’s National Key R&D Program (2016YFA0602801), Joint Development Program of Beijing Municipal Commission of Education and the Fundamental Research Funds for the Central Universities. We appreciate the comments and constructive suggestions from the anonymous referees.


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Copyright information

© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.School of Management and EconomicsBeijing Institute of TechnologyBeijingChina
  2. 2.Center for Energy and Environmental Policy Research (CEEP)Beijing Institute of Technology (BIT)BeijingChina
  3. 3.Sustainable Development Research Institute for Economy and Society of BeijingBeijingChina
  4. 4.School of EconomicsShanxi University of Finance and EconomicsTaiyuanChina
  5. 5.Beijing Key Laboratory of Energy Economics and Environmental ManagementBeijingChina
  6. 6.Collaborative Innovation Center of Electric Vehicles in BeijingBeijingChina

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