The Effect Of Listed Companies’ Financial Ability On R&D Investment

Scientific and technological innovation is the important source of a society’s continuous development and progress. From the micro level, research and development activities are the basis of not only the basis of an enterprise’s survival and development, but the motivation of an enterprise’s growth. However, the level of Chinese enterprises’R&D investment is constantly lower than that of developed countries’, which has seriously restricted the capacity of scientific and technological innovation of Chinese enterprises. Therefore, how to improve the level and efficiency of enterprises’R&D investment has currently become an important concern for theory and practical fields. At the present stage, many scholars at home and abroad have conducted a variety of theoretical research about enterprises’R&D activities and acquired rich achievements. They have researched the effect of the macro factors upon enterprises’R&D in terms of the degree of market competition, government subsidies and the marketization degree, while others have used the factors of corporate governance to conduct the similar exploration, including equity structure, nature of property right, management characteristics and the mechanism of board of directors. But indeed, few studies were conducted about how the financial ability of listed companies affected the R&D investment.The article has firstly selected1606listed companied of Shanghai and Shenzhen Stock Exchange as a sample from2007to2012, and then classified the financial ability into profitability, debt payment ability, growth ability, operational ability and cash flow ability. The main purpose is to reveal the relationship between financial ability and R&D investment through theory and model derivation. Specifically, it has empirically examined the effect of the financial ability of listed companies upon R&D investment by using OLS multiple linear regression method. The findings are shown below:first, there is a significantly positive relationship between profitability of listed companies and R&D investment. In other words, the more powerful the profitability of listed companies is, the more R&D investment enterprises will implement; second, it takes on a significantly positive relationship between the debt payment ability and R&D investment, namely that the more powerful the debt payment ability is, the more R&D investment will be implemented; Third, the growth ability and R&D investment show a significantly positive relationship. That means the more powerful the growth ability is, the more R&D investment companies will carry out. Fourth, there is little significant relationship between operational ability and R&D investment, which indicates that the operational ability of listed companies cannot have a vital effect on R&D investment; Fifth, there is a significantly positive between cash flow ability and R&D investment. Specifically, the more powerful the cash flow ability is, the more R&D investment enterprises will implement.From the unique perspective of the financial ability of listed companies, the article will establish the decision-making model of listed companies’ R&D investment on the basis of financial ability, and then study how the financial ability mentioned above can affect the R&D investment systematically. Therefore, the article will provide a new perspective for later research about the R&D investment and have a certain theoretical significance in enriching the related research field.