Abstract: Government innovation subsidy is an important policy tool to support technological innovation for agricultural enterprises in a country, which is the best way to achieve the goal to promote the R&D investment leverage effect of agricultural enterprises rather than form subsidy dependence. However, there is still no systematic research on the effects of government innovation subsidy on technological innovation performance of agricultural enterprises. This paper firstly defines and analyzes the relevant theories and concepts of innovation subsidy, technological innovation and corporate governance mechanism based on the literatures from domestic and abroad. Next, on the basis of exploring the correlation among the variables, research hypothesis is proposed, and the conceptual model is established. Two groups of hypotheses are proposed as follows: H1, government subsidies positively influence the R&D investment for agricultural enterprises, to make technological innovation. H2, agricultural enterprises’ performance affects R&D investment from the long run and short run, and vice versa. Furtherly the paper empirically identifies the relationship between government subsidies, performance and R&D investment by using simultaneous equation model based on the data collected from the Chinese listed panel data of agricultural enterprises over the period of 2012-2014 from regular reports, disclosure information as well as their own website. A total of 105 agricultural-related listed enterprises in agriculture, forestry, animal husbandry and fishery in the Shenwan industry classification were studied. The annual financial statements of the enterprise audited and approved by the CSRC were used as data sources. A complete database including 81 agricultural listed enterprises between 2012-2014 is obtained after eliminating the incomplete enterprise data of important research indicators. The results show that there is a significant positive effect of government innovation subsidy on the R&D investment for agricultural enterprises, while the effects are different among agricultural industries. Enterprises’ performance affect R&D investment from the long run and short run both, while the former less effect than the latter. The result also suggests that R&D investment from agricultural enterprises significantly relies on government innovation subsidies. As regard to the industry differences, there are significant industry differences in the effects of government subsidies on agricultural innovation and R&D investment for agricultural enterprises in China. The average level of R&D investment in crop farming and animal husbandry enterprises is higher than that in forestry and fishery enterprises, while the former R&D investment is significantly different from the latter. In addition, there are much stronger stimulating effects of government subsidies on R&D investment increase for enterprises in crop farming and animal husbandry than those in forestry and fishery industry. An analogous situation exists between non-state-owned agricultural enterprises and state-owned enterprises. Compared with state-owned enterprises, there are much stronger stimulating effects of government subsidies on R&D investment increase for non-state-owned agricultural enterprises. However, the distribution of subsidies in industry, forestry, animal husbandry, and fisheries does not reflect the differences between the industry and individuals among agricultural enterprises. Moreover, individual heterogeneity and corporate governance mechanisms are also important factors affecting the efficiency of government subsidies for R&D innovation investment. Highly concentrated equity structure and incentives for corporate executives are more conducive to increase R&D investment and improve performance for agricultural enterprises as a whole. High asset-liability ratio is not conducive to promote R&D investment and performance improvement, while perfect governance structure would have a regulatory effect on R&D increase and corporate performance for agricultural enterprises. Finally, the paper provides advice on enterprise management and policy implementation from improving the R&D efficiency of agricultural enterprises and adjusting the government subsidy distribution structure.The paper argues that regulating government grants funding, improving the corporate governance and capital structure are the prerequisite of perfecting the technological innovation system, and improving business performance for agricultural enterprises. Agricultural enterprises should improve the ownership structure, executive compensation, optimize the structure of assets and liabilities, and enhance the corporate governance mechanism to maximize corporate performance from R&D investment. The implementation of the government subsidy policy should focus on raising the level of government subsidies for high-technology agricultural enterprises in crop production and animal husbandry, strengthening the supervision and control of government subsidies for agricultural enterprises, and improving the efficiency of government subsidies.

Key words: government innovation subsidies, R&D investment, agriculture-related firms, enterprise performance, technology innovation