Positive Study On Relationship Between R&D Spending And Performance Of Firms

The level of technological innovation is the key factor that decides whether the enterprise has the competitive superiority or it can gain long-term development. According to the disclosure statistics of National Bureau statistics,R&D investments, which represents the ability of innovation, are much lower than that of the average level of the world.Manufacturing industry takes great proportion in the whole industry in many ways,such as the numbers of enterprises and employees,operating revenue,and so on.The problem of lack of R&D investments which will cause inadequate self innovation affects the long-term competivity ability of enterprise.The temporary technological innovation research focus on technology or strategy,ignoring the impact to the financial performance,especially farther research of the financial policy.This article using 316 observations of listed manufacturing firms between the years 2004-2007, makes following empirical studies.On the one hand,chooses the financial policy index as dependent varibale,R&D as the core independent variable to test the impact of technology to finanicial policy.On the other hand,on the basis of investigation of influence on enterprise performance,this article validates the impact on the profitability of enterprise capital structure with different R&D investments levels,expecting some realistic meaning to managers and investors of listed companies.Concretely,this article verified the correlation bettween financial policy and R&D investment;then we studied the correlation bettween financial policy and enterprise performance, while operating revenues growth and TB(Q) is the example of growth, profit margin is that of profitability;at last we connect R&D investments with financial policy and profit margin to see if the capital structure of higher R&D investments enterprise effects significiantly on the profitability of enterprise.This article have conclusions as follows:(1) The listed manufacturing companies with high R&D investments minimize debt financing to avoid higher capital cost;and hold much more cash on hand to preparing internal financing;(2) The impact of technological innovation on the rate of operating revenues growth and TB(Q) is not obvious,but has significiant correlation with profit margin;The capital structure of higher R&D investments enterprise effects significiantly on the profitability.