The Effect of Anti-subsidy Actions on Corporate Disclosure of Subsidy Information

Abstract

This paper examines the effect of anti-subsidy investigation and penalty (through countervailing duties) on disclosure of government subsidy information by Chinese listed firms. We find that firms reduce disclosure of subsidy information when their exported products are facing anti-subsidy investigation or charged countervailing duties. The effect is stronger when the countervailing duties are higher, when the affected firms have a higher export revenue from the product under investigation or penalty, when the country taking the anti-subsidy action has a worse relationship with China, and when the affected firms export to more countries. The effect persists into three years after the action and spills over to peer firms that export the investigated products to other countries or export similar products.