Government Subsidies,Debt Levels And R&D Investment

At present,enterprises have become an important part of China’s R&D investment.However,due to R&D projects have the high risk and high cost,it requires a large amount of capital investment.If only relying on the enterprise or the market mechanism to operate on its own,it will inevitably encounter the dilemma of underinvestment or market failure,which is bound to require government subsidies to support it.However,whether this approach can bring effective promotion is controversial.At the same time,if the company’s debt level is too high,it will make enterprise’s R&D to face difficulties in financing and higher costs,then cause enterprises’ enthusiasm for R&D is not high or they directly use government subsidies for other purposes,which ultimately affects the effect of government subsidies.Therefore,whether the level of debt will affect the relationship between government subsidies and R&D investment needs to be explored.In order to more objectively evaluate the impact of government subsidies on R&D investment,this paper selects the 2009-2016 data of listed companies of SME and GEM as samples,based on externality theory and signal transmission theory,analyzed and tested the relationship between government subsidies and R&D investment.At the same time,based on the theory of trade-offs theory and agency cost theory,we further analyzes the role of the debt level in regulating government subsidies and R&D investment.In addition,according to the nature of property and regional differences,the samples were grouped to make the articles more detailed and in-depth.Through the analysis,the following conclusions can be drawn: First,government subsidies and R&D investment are significantly positively correlated,which shows that the government increase the subsidies for SME board and GEM listed companies is conducive to increase R&D investment;Second,the company’s debt levels will restrain the incentive effect of government subsidies on R&D investment;Third,according to the grouping of property rights,the government subsidies in private enterprises have a stronger incentive to R&D investment,and the private enterprises of debt level is more restrained to the incentive effect of government subsidies;Fourthly,with the region as the observation dimension,we can find that the government subsidies in the eastern coastal areas have stronger incentive effects on R&D investment,and the debt level of the enterprises has stronger inhibitory effect on the incentive effects of government subsidies.According to the conclusions of the study,opinions were submitted from both government and business perspectives.From the government’s point of view: First,we should improve the intellectual property protection system and standardize the disclosure of R&D information;Second,we should monitor the use of subsidies and focus on high debt level enterprises;Third,we should increase the subsidies to private enterprises and the eastern coastal areas.From the perspective of the enterprise,it is necessary to reasonably control the level of debt and make full use of government subsidies.