Empirical Study On Debt Financing And Corporate Technology Innovation From The Perspective Of Political Connection

At present, China’s economic transformation is at a critical moment, but the existing system and the economic system does not match the rapid growth. In order to better participate in the market, to obtain greater market and share more and more preferential scarce resources, private enterprises have seek opportunities to build relationships with the government, therefore associated political system has become an alternative to the formal system, generally exists in private enterprises. In recent years, the economic effects of political association attracted scholars research interests, results show that the impact of political association business activities, investment activities, financial condition and other aspects are significant. Throughout all kinds of factors that affect the development of private enterprises, funding problems bear the brunt. On the one hand, private enterprise less than state-owned enterprises, vulnerable to the impact of financing constraints, the company has only to solve the financing problem have enough capital to invest in business enterprises. In the bank-dominated financial system, companies external financing mainly rely on debt financing, therefore ease the financing constraints especially debt financing constraint problem is a top priority. On the other hand, sustainable development of enterprises is inseparable from innovation-driven, but from the basic research to applied research and then put into the market, each step of technological innovation cannot do without the capital injection, so the capital problem has also become the key to the success of technological innovation. As the basis of all management activities, investment and financing provide adequate financial to support technological innovation, technological innovation of enterprises can not do without financial support, technical innovation and financing are closely related. But the debt financing can provide adequate financial support for technological innovation investment? Establish political association can get larger scale and longer term debt financing? The political connection can alleviate the effect of debt financing constraints on technological innovation investment?In this paper, we choose private high-tech company’s data from 2010 to 2014 as the objects of study. Based on the relevant theories as the research support, we use a combination of theoretical analysis and empirical analysis methods, in order to probe into and solve the above problems. After empirical analysis, we do robust test for the relevant model to verify the validity of the model analysis results.Conclusions are as follows:(1)Political relation can effectively alleviate the debt financing constraints, bring enterprises convenience to obtain bank credit funds, further distinguished the bank lending,we found that political association is also very useful to extend the loan term. This shows that the political connection has resource effect, it can reduce the adverse impact of the debt financing for private enterprises in our country because of reasonable credit resources distribution. (2)High debt ratio will increase the cost of corporate debt, enterprise technology innovation investment is vulnerable to debt financing constraints.(3)Political association improved debt financing for investment in technological innovation negative effect. From the empirical study we found that compared with no political connections debt financing will certainly inhibit the R&D investment, establish contact with the government can effectively alleviate the situation, the political association can not only ease the debt problem of poor funding, but also to improve technology insufficient investment in innovation. (4)The political connection has hindered the technological innovation investment. The negative effect is mainly caused by the following three reasons. First, the establishment of political association and maintenance costs too much, which causes the burden, reduce the funds available for R&D; Second, rent-seeking behavior breeding enterprise inert, causing companies do not want to devote resources to high-risk R&D projects; Third, the overall political association is inefficient.Based on the conclusions and our country’s conditions, the paper according to China’s national conditions, put forward policy recommendations from companies, government and financial institutions.