Based on agency theory, this study analyzed the effects of government R&D subsidies on individual firms' private R&D investment and innovation performance. It also examined the moderating effect of financial slack on these relationships. The analysis was conducted on approximately 5,800 listed and unlisted firms that received government R&D support at least once between 2010 and 2012. The empirical results of this study revealed an inverted U-shaped relationship between government R&D subsidies and individual firms' private R&D investment. Furthermore, the proportion of government subsidies within a firm's total R&D investment also exhibited an inverted U-shaped relationship with the firm's R&D performance. These findings indicate that government support serves as a catalyst to stimulate corporate R&D up to a certain level, but excessively large subsidies can instead induce moral hazard and impede corporate innovation. Finally, the financial slack that individual firms hold internally did not have a significant effect on the relationship between the proportion of government subsidies and primary R&D outcomes such as patents and publications, but it did have a significant positive effect on the relationship with secondary R&D outcomes measured by commercialization performance. Based on these findings, the study discussed implications and limitations.