Research On The Correlation Between Operating Cash Flow Volatility, Cash Holdings And Corporate R&D Investment

Under the history background of the of the Chinese economy stepping into the new normal, peoples innovation has become the new engine of China’s economic development, the R&D investment have become the important manifestation of science and technology innovation. Our country strongly advocate innovation, and encourage enterprises to carry out R&D investment and through research and development investment to improve the capability of independent innovation.which has become the basic strategy of development of science and technology of our country.R&D investment is the source of enterprise technology innovation. There are many factors that can influence investment enterprise development, such as business performance, working capital, firm size, growth, governance mechanism, executive characteristics and the nature of the industry, but the most direct factors influencing enterprise R&D investment is considered to be cash. Because the R&D investment activity has the characteristics of long cycle, high cost, risk and income lags behind, therefore, R&D investment is a special kind of investment, on the one hand, the adjustment of the higher costs require companies to have sufficient funds to ensure continuous investment, from research to form a new product is a long-term investment activities, Once make innovation decision-making, it’s need to provide stable funding for research and development activities in each period.On the other hand,higher external financing costs and the enterprise internal cash flow fluctuations also limits its capital source, at this point,exploring maintain R&D activity smooth path has the practical significance, it’s very important for enterprise investment and continuous innovation. Now most scholars begin to involve the research of the relationship between cash holdings and R&D investment, under the financing constraints, both at home and abroad.And cash holdings smoothing R&D investment has become one of the focuses of research and development investment theory research. But few scholars combined operating cash flow volatility factors to analysis the way of operating cash flow on cash holdings smoothing R&D investment effects.Therefore this article selects 2010-2014 Shanghai and Shenzhen two city information technology industry listing Corporation as sample, combined with factors of the operating cash flow volatility, do empirical analysis on the relationship between cash holdings and R&D investment. Results show that the more the current period cash holdings, the more R&D spending.the cash holdings has smoothing effect on R&D investment, cash holdings variation is negatively related to the R&D investment; To further explore, we find that the smooth effect of cash holdings to invest in research and development can be varies as the operating cash flow volatility, Operating cash flow volatility has a positive adjustment on cash holdings smoothing R&D investment. This paper consists of six chapters. First chapter introduce the research background, research ideas, research methods and elaborate significance and research framework construction and content, innovation and the concept definition. The second chapter sort out the domestic and foreign research situation, and discuss related issues; Chapter three respectively introduce the theory of operating cash flow volatility, cash holdings and investment in research and development. do some theoretical analysis and put forward the research hypothesis; the fourth chapter of research including the selection of sample, setting variables and constructs the model; through descriptive statistics of the main variables in the fifth chapter, correlation analysis and regression analysis to verify assumptions, the sixth chapters based on the above discussion and conclude the final results. And based on this, the paper puts forward constructive suggestions for the problems exposed. At the same time, it points out the future research directionThe basic point of innovation: first of all, from the listed companies operating cash flow fluctuation characteristics, providing a new angle of view for our country enterprise cash holdings and R&D investment research; on the other hand, it chooses the information technology industry as the object because of their R&D activities are intensive, and to explore whether the operating cash flow volatility has a positive adjustment on cash holdings smoothing R&D investment. So the conclusion can broaden the research field of cash holdings and corporate R&D investment, and deepen the understanding of cash flow management.