The Management Of Internal Control On The Company's R&D Investment

Innovation especially technology innovation can improve the core competitiveness of enterprise,and promote economic growth.As an important part of enterprise technology innovation,R&D investment plays a vital role to enterprise health and sustained development.R&D investment has the characteristics of large investment,long cycle and big risk,it needs to constantly explore the process of technical feasibility.So whether R&D investment can bring economic benefits for enterprises in the future has great uncertainty.As R&D investment spending power,the problem of the efficiency of Chinese enterprises worth attention.Due to the problem of the existence of agency and the asymmetric information,managers and shareholders are likely to make the optimal investment decision in order to seek private interests.So in the process of R&D investment,companies are actually more vulnerable to inadequate investment and excessive investment.As a effective corporate governance mechanism,internal control can ease the principal-agent problems between the shareholders and managers,large shareholders and minority shareholders.Internal control can restrict and supervise the unreasonable investment decision-making behavior of the big shareholders and managers,and effectively alleviate the underinvestment and overinvestment in R&D issues,improve the efficiency of R&D investment.In this paper,we do the empirical study on the effect of internal control on the company's R&D investment.We use the listed companies in Shanghai stock exchange and Shenzhen stock exchange from 2009 to 2015 as a whole sample for regression analysis.The empirical results show that internal control has a two-way governance effect on R&D investment.The empirical results show that internal control and R&D investment is significantly positively in the level of 10%in the inadequate investment group,that is,internal control can significantly promote R&D investment in the inadequate investment companies.And the internal control is negatively related to the R&D investment significantly at the level of 5%,that is,internal control can significantly inhibit the company's excessive R&D investment.As an effective governance mechanism,internal control can promote the efficient allocation of innovative resources,inhibit inefficient R&D investment and improve the efficiency of R&D investment.This paper explores the economic consequences of internal control from the perspective of R&D investment.It is helpful to improve the governance level of internal control system and the efficiency of R&D investment of listed companies in China.It is conducive to listed companies to establish a sound and perfect internal control system,and also has a strong practical significance to the sustainable development of listed companies in China.