Study On The Protection Of Asset Sales To R&D Investment And Its' Impact On Profitability

R&D,as a key factor for companies to enhance their core competitiveness and achieve sustainable development,plays an increasingly important role in increasing the company's future opportunities and enhancing its profitability,and it also has a continuing positive impact on corporate value.However,the R&D investment is faced with a serious problem of information asymmetry,those that are R&D-intensive are generally faced with the problem of financing difficulties.R&D investment is related to the development of enterprises,so both domestic and foreign scholars have accumulated a lot of theoretical research and practical experience on how to finance R&D investments,especially the two commonly used external financing channels of equity and debt as well as using cash holding to smooth R&D.In recent years,with the capital market becoming more and more active,the protection of R&D investment through asset sales has become more and more widely used in practice.In sharp contrast,however,theoretical research on the sale of existing assets to protect investment in R&D has been very few.Therefore,we use the panel data of listed technology-intensive companies in Chinese A share market from 2007 to 2015,we firstly examine whether company will protect R&D investment by selling existing assets using system GMM.Furthermore,we measure the degree of R&D investment protection and analyze its impact on corporate profitability.Base on the characteristics of financing constraints and technical track of technology-intensive firms,we introduce financing constraints dummy variables and the core innovation efficiency to explore its moderating role in the sales of existing assets to protect R&D investment and its value in firms' profitability.The results show that firms allocate the cash flow from selling existing assets to protect R&D investment in order to seek opportunities and obtain capabilities in gaining future potential technical assets.And this tendency is more obvious in more constrained and higher innovation efficiency firms.Moreover,the R&D protection behavior in technology-intensive firms can produce a huge strategically competitive advantage and thus enhance profitability.The effect of R&D investment protection on corporate profitability is weaker in financial constrained firms but stronger in high innovation efficiency firms and high innovation efficiencycan also weaken the negative effect of financial constraints.Our findings enrich the research results on corporate investment and financing decisions,resource allocation and corporate value,and reveal the path of resource allocation policies to enhance corporate profitability.Our findings also provide a theoretical basis and practical guidance for Chinese companies to seek basic resource allocation decisions in the process of seeking innovation.