Research On Effects Of Tax Incentives On R&D Investment Of China’s Growth Enterprise

Nowadays, there are numerous domestic and foreign academic researches on R&Dinvestment， including enterprise scale, governance structure, executives’ character,management incentive, financing constraints, government policy, property protection, demandvolatility, and so on. But most of them focus on only one influnce factor of the effects ofR&D investment, and most on the macro level. However, the economic environment of themarket which the companies face is complicated and uncertain, and R&D investment is notinfluenced by only one single factor. Therefore, this study is about how the tax incentives takeeffects on the company R&D investment, under the condition of financing constraint byobserving the small and medium sized listed companies on GEM. This study gives companiesmethods to manage their funds by selecting the right tax incentives, and provides guidancewhen small and medium companies face financing constraints.Combining theoretical and empirical study, this paper takes a research on the moderatingeffects between financing constraints of listed companies on GEM. Firstly, it introduces thestatus of China’s company R&D activities and tax incentives, and the theoretical analysis ontax incentives and companies’ financing constraint based on market failure theory andfinancing constraint theory,related literature review also included. Next, taking176listedcompanies in2010-2012on GEM as the research samples, we construct Logistic method tomeasure the financing constraints, verify the four hypothesis by descriptive statistical analysis,correlation analysis and regression analysis, and use robust analysis to ensure reliability of theresults.Our research shows that:(1) When companies are subjecting to strong financingconstraints, the income tax incentive adopted by government has significant positive effect incompany’s R&D investment;(2) When under the strong financing constraints, the more thepreferential for income tax of company enjoyed,the more the investment will devote toR&D.(3) Whether the strength of financing constraints, income tax incentive adopted bygovernment shows more incentives on company’s R&D investment than the turnover tax incentives.This paper details the relevant factors affecting R&D investment, and provides advices tothe companies to choose right tax incentives according to the financing constraints in order tosolve the problems of R&D spending constraints.