Abstract: The article use the data of Manufacture industries and Information technology industries listed companies to study the impact of the performance dilemma on the firms’ R&D smoothing and the regulation role of government R&D subsidies. The study found that the performance dilemma has a significantly negative effect on the firms’ R&D smoothing, and this negative effect is more obvious in small-size firms. Government R&D subsidy has a significant negative adjustment effect on the relationship between performance dilemma and the firms’ R&D smoothing. That is, government R&D subsidies alleviate the negative impact of the performance dilemma on the firms’ R&D smoothing. Compared with large-scale firms, the negative adjustment effect is more obvious in small-size firms.

Key words: R&, D investment smoothing