Abstract:    The government′s rational distribution of financial subsidy to inspire enterprise innovation is an important path to realize the transformation of economic growth from factor-driven economy to innovation-driven economy. However, during the implementation of China′s financial subsidy policy, rent-seeking and fraudulent compensation problems have emerged. How to optimize the financial subsidy policy and improve the efficiency of the use of financial subsidy is an urgent problem to be solved. Based on the existing literature, this paper discusses the impact and mechanism of financial subsidy on enterprise innovation from the perspective of distribution of financial subsidy.
    Based on the 2010-2015 national taxation survey data, this paper takes the reform of the competitive distribution of specific financial funds as a quasi-natural experiment, and uses the difference-in-difference method to examine the impact of competitive distribution procedure on enterprise innovation. The competitive distribution procedure means to transform the distribution of financial subsidy from one-to-one to one-to-many. The results show that, compared with the traditional distribution procedure, the competitive distribution procedure can better stimulate enterprise innovation. The average innovation investment will increase by 286,310 yuan, and the innovation intensity (the proportion of innovation investment in operating income) will increase by 0.176%. In order to ensure the applicability of the difference-in-difference method, this paper carries out a parallel trend test, the event study results prove that the parallel trend exists. The dynamic effect test shows that changes in the distribution procedure of financial subsidy have brought about a rapid increase in enterprise innovation input and innovation intensity in the following years.
   This conclusion is still robust after a series of robustness tests. Specifically, using the average value of innovation input and the average value of innovation input intensity in the past three years as dependent variables to solve the worry that companies may whitewash innovation investment. By adding the province-level control variables and time polynomial interaction terms, and industry dummy variables to control the influence of different development trends between provinces and industries. Constructing a "hypothetical" treatment group for placebo testing, the results show that in the case of randomly determining the treatment group, the benchmark regression results are unlikely to appear.
    Mechanism analysis results show that the competitive distribution procedure encourages enterprise innovation through two channels: "selection effect" and "certification effect". The selection effect means that the government can select high-innovation companies with stronger positive externalities based on the company′s innovation information and provide high financial subsidy. The certification effect means that the government grants financial subsidy according to the innovation ability of enterprises, so that financial subsidy can be used as a certification signal of the quality of enterprise innovation and solve the failure of the innovation financing market.
    In order to comprehensively examine the impact of the competitive distribution procedure on enterprise innovation, the government behavior, market environment and enterprise scale are included in the analysis framework. The results show that increased pressure on GDP-based performance appraisal will weaken the effect of competitive distribution procedure on enterprise innovation. Besides, the increase in marketization will enhance the effect of competitive distribution procedure on enterprise innovation, meaning that good market competition environment helps to establish a fair and just competitive financial subsidy procedure. In addition, the competitive distribution procedure has a more obvious effect on small-scale enterprises′ innovation input. The reason may be that large-scale companies have stronger financing capabilities, and relatively speaking, the certification effect has limited effect on their innovation decision-making, while small companies have weak financing capabilities and need to use the government′s certification effect to ease the financing constraints encountered in the innovation process.
    Based on the above conclusion, this paper puts forward the following suggestions. First, it′s necessary to actively promote the competitive distribution reform of financial subsidy, including the developing of a simple and efficient fiscal subsidy distribution process, reducing the burden of enterprise application, avoiding ownership discrimination and scale discrimination; and enhancing the independence and professionalism of the project review expert team. Second, changing the traditional GDP-based assessment system and adding enterprise innovation indicators to the assessment system, which can encourage officials to formulate policies in accordance with time and place to stimulate enterprise innovation. Third, it′s important to improve the level of marketization, clarify the decisive role of the market in the distribution of resources, and provide the necessary institutional conditions for the effective operation of the market mechanism.

Key words: financial subsidy, competitive distribution, enterprise innovation, quasi-natural experiment