Investor Sentiment,Financing Constraints And R&D Investment

The Fifth Plenary Session of the Eighth Plenary Session put "Innovation And Development" as the first of the five development ideas.At present,China’s innovation R&D investment progress is significant,but it seems to be slowdown.Compared with the developed countries,there is a huge gap.At the same time,enterprises as the main part of innovation in China,its R&D investment accounted for less than 1%of sales revenue,R&D investment intensity is seriously inadequate,which will seriously hinder the enterprise’s innovative R&D activities and China’s economic development.According to statistics,the enterprise R&D investment funds more than 90%from the enterprise itself,government subsidies accounted for very little.Therefore,enterprises can only rely on internal financing and external financing for R&D investment.But the cycle of innovation and R&D activities is very long,which costs sustained financial support.Besides,the high risk and information asymmetry make the enterprise R&D investment in the external financing to be faced with strong financing constraints.Financing constraints has been the constraints of corporate R&D investment.How to ease corporate financing constraints and improve the intensity of R&D investment is an important issue.The behavioral finance theory defines the deviation from the basic value of the stock due to the irrationality of the investor and the stock price caused by the limited arbitrage as "investor sentiment".Investor sentiment changes will give enterprises a certain impact on outside financing.According to the theory of "market timing","equity financing channel","bond financing channel" and "credit financing channel".When investor sentiment is high,enterprises can alleviate financing constraints by increasing equity financing and debt financing,so as to improve the intensity of R&D investment.Whether the investor sentiment’s change will affect the financing constraints of enterprises and R&D investment intensity is a worthy question to study.In the beginning,this paper reviews the relevant literatures of investor sentiment,financing constraints and corporate R&D investment,and analyzes the current situation of investor sentiment,corporate financing and enterprise R&D investment.Then,we analyzes the transmission mechanism of investor sentiment’s influence on the financing constraint and R&D investment intensity.On this basis,we chooses Euler equation investment model of enterprise R&D investment,and chooses the "manufacturing industry","scientific research and technical service industry","information transmission,software and information technology service industry" as samples,calculate the investor sentiment composite index with Principal Component Analysis,the R&D investment-cash flow sensitivity is used to measure the financing constraints faced by R&D investment.The system GMM method is used to estimate the dynamic panel data.Besides,we discuss the different ownership attributes and enterprises of different sizes to study the difference the impact of investor sentiment’s change on different kinds of enterprises.Through the study,this paper draws the following main conclusions:First,R&D investment of listed companies in China generally faces obvious financing constraints.When investor sentiment raised,the financing constraints of enterprises will be eased and the R&D investment of enterprises will be promoted.Second,the financing constraints faced by non-state-owned enterprises are higher than those of state-owned enterprises.The easing effect of investor sentiment on the financing constraints of non-state-owned enterprises is stronger than the mitigation effect on the financing constraints of state-owned enterprises,and the promotion of R&D investment in non-state-owned enterprises is greater than that of state-owned enterprises.Third,the financing constraints faced by small-scale enterprises are higher than those of large-scale enterprises.The effect of investor sentiment on mitigation of small-scale enterprise financing is stronger than that of large-scale enterprise financing,and the promotion effect of small-scale enterprise R&D investment is greater than that of large-scale enterprise R&D investment.Fourth,government subsidies have a positive effect on the R&D investment intensity of enterprises,especially for non-state enterprises and small-scale enterprises.But on the whole point of view,the government subsidies on the R&D investment intensity of the promotion of the role is not obvious,indicating that government subsidies to be strengthened.Then,the following recommendations are given in this paper:First,for the purpose of improving China’s capital market construction,including the improvement of the rules and regulations,as well as to strengthen the education of the majority of investors to promote the healthy development of China’s investor sentiment.Second,business managers can expand the scale of external financing to ease the financing constraints when investor sentiment is raised.Besides,they have to focus on enterprise development.The funds should be used to promote long-term development of enterprises,such as innovative R&D activities.Third,the government should increase the support of innovative R&D activities through policy guidance,financial subsidies and other ways to promote the development of China’s innovative R&D activities.