The Impact Of Financing Constraints On R & D Investment

Innovation is the soul of a nation. It is also the source of a nation’s prosperous and the inexhaustible power. In a globalized and integrated society, the innovations of the product, concept, systems and mechanisms directly determine a country’s competitive position in international industry chain. The enterprise, the most important innovation body, its innovation activities mainly come from the research and development(R&D). In recent years, the R&D investment plays a more and more prominent role in improving the enterprise’s core competitiveness, optimizing the economic structure and promoting industrial upgrading. However, because of the need of continuous, huge and stable input, the R&D investment has to bear the the possible failure of huge risk actively in oR&Der to gain lasting competitive advantage and excess profits. The R&D investment mainly depends on the enterprise investment. The financing channels include endogenous and exogenous ways, but as the imperfect and information asymmetry in the capital market widely exist, all the enterprises’funding lelied on R&D investment faces the common and different degree of financing constraints,which ultimately leads the success to economic transition in China. Therefore, it has very important theoretical significance and practical value to anlyse the different financing channels (mainly debt financing and equity financing) on how to constrain R&D investment and how to alleviate the financing constraint problem of R&D investment.Scholars at home and abroad did a lot of researches on enterprises’ R&D investment, the affecting factors of financing constraints and its economic consequences based on the information asymmetry theory, principal-agent theory, and the theory of optimal sequence financing. The previous researches, on the one hand, investigate the impact on the enterprise’s R&D investment from the corporate governance structure, the micro financial characteristics and national macro policy. On the other hand, another research focus on the R&D influence of the enterprise’s value and its financial policy, as well as the market reaction. The studies on the influence of corporate financing constraints are mainly from the aspect of the level of financial development, collectivization or not, the nature of the property, and enterprise scale. Due to the limitations of time, methods and techniques, etc, these studies are less involved in financing constraints on corporate R&D investment scale, the efficiency of R&D investment and so on. If we can study the influence on corporate investment from the perspective of financing constraints, it wll be more advantageous to reveal the causes of the formation of financing constraints as well as its correlation with the R&D investment. Meanwhile, based on the previous research conclusion, we may safely draw a conculution that most enterprise’s R&D investment faces different degree of financing constraints. Therefore, this paper selects IT listed companies in the city of Shanghai and Shenzhen whose financing constraint problems are very prominent as as research samples so as to provide a new research idea and theoretical basis for relevant theory and practical problems.From the perspective of financing constraints, this paper studied the IT listed companies’ shortage problem of the R&D investment. Firstly, it combed the theory of literature of the domestic and foreign scholars’ researches about the financing constraints and R&D investment in recent years. And then, from the theory of FC (i.e. financing constraints) and R&D investment, combining with the influence factors of R&D investment and its economic consequences, on the basis of theoretical analysis, this paper adopted the method of combining normative analysis and empirical analysis, preliminarily studied the R&D investment and the correlation of investment and financing constraints of our country’s IT listed companies. By using these companies’ disclosure R&D data in their annual reports from the year 2010 to 2013 as the research sample, the paper designed the corresponding measure of financing constraints, and empirically inspect the following assumptions:Firstly, the IT listed companies have the common problems in financing constraint. Secondly, this kind of companies face the obvious debt financing constraints, but they prefer to equity financing. That is to say, R&D investment is significantly positively related to the equity financing, and negatively related to debt financing, but not significantly. ThiR & Dly, accoR & Ding to the index of financing constraints we constructed in this paper, we considered that IT listed companies’ R & D investment is negatively related to FCI (i.e. financing constraints index).Finally, combined with the empirical research conclusion, this article put forwaR&D to relevant policy recommendations to relive the investment financing constraints faced by IT listed companies from three levles, i.e. macro, medium and micro angles. The empirical study conclusion showed that the software IT listed companies confronted with more obvious debt financing constraints, but they prefer to equity financing. Based on this, from a macro point of view, the government should broaden the direct and indirect financing channels, especially develop the capital markets with many efforts, innovative financing systems, reduce the thresholds of the enterprises’ direct financing, encourage enterprises to turn on the equity financing when raising the funds required to R & D investment activities. From the medium industry level, our country has taken IT industry as a strategic emerging industry. It should ease the financing constraints by reducing tax buR&Den for the industry and the increasing fiscal transfer payments. At last, enterprises should also start from their own perspective to perfect their internal management and control level, reduce external financing constraints by improving their internal cash flow.