Study On The Influence Of R&D Investment And Financing Constraints On Trade Credit

On existing literature, when consider the relationship between R&D investment and trade credit, ignoring that financing constraints may have an impact on the relationship between the two. On one hand, financing constrains may affect company’s middle market behavior(for example: R&D investment). On the other hand, it may affect weather corporate can obtain the funds or not. But, how company’s middle market behavior affect trade credit in different financing constrains has been neglected in prior research. In this paper, we put forward research hypothesis on the basis of theoretical analysis and then exploring the moderating effect of financing constraints on the relationship between R&D investment and trade credit by Hierarchical Moderating Regression and Subgroup Analysis. At the same time, set financing constraints as the threshold variable to constructed the panel threshold model between R&D investment and trade credit. Trying to answer when and how financing constraints affect the relationship between R&D investment and trade credit and how much impact.There are some empirical results as follows:(1) In the term of direct effect, R&D investment is positive correlative with trade credit.(2) Financing constraints did have positive moderating effect on the relationship between R&D investment and trade credit.Further research show that: there’ve double threshold effect between R&D investment and trade credit. In other words, response of relationship to R&D investment and trade credit is non-linear in different financing constraints. To say more specifically:(1) When corporate face high financing constraints, that is to say, times interest earned ratio less than the first threshold method,-23.13, the relationship between R&D investment and trade credit was negative but not significant.(2) When financing constraints was in medium range, that is to say, times interest earned ratio was between two threshold-23.13~2.56, there is significant positive correlation between R&D investment and trade credit, at the level of 1% and the marginal effect was 0.357.(3) In low financing constraints, that is to say, times interest earned ratio above the second threshold method 2.56, the two was positive correlation but with little strength, the marginal effect was only 0.082. In all, the relationship between R&D investment and trade credit was affected by financing constraints—if the level of financing constraints was too high or too low, R&D investment have less effect on trade credit or even no effect. But under the moderate degree of financing constraints, trade credit increased with the increase of R&D investment increased.Finally, put forward five advices for company to do better on investment decision, based on the results.