Economic Policy Uncertainty,Cash Holding And Enterprise Innovation

Innovation is the key of enterprise progress and national economic development.Since the reform and opening up,the production capacity and production scale of Chinese enterprises have made progress,but the level of innovation and the capability of innovation are always lower than the social economic development.The influencing factors of enterprise innovation investment of China come from inside and outside of the enterprise,mainly including the scale and basic structure of the enterprise.At the same time,because state-owned enterprises are generally easier to obtain government support,their innovation willingness and innovation level are relatively lower.Cash holding as the most direct influencing factor of corporate innovation investment,the corporate cash holding and the changes of cash holding level are both have significant impact on corporate innovation.In the current market environment,enterprises with different natures and scales of property rights will face different levels of financing constraints,which will lead enterprises are willing to use their internal cash flow to ensure the normal operation of innovative R&D,that is the innovative smoothing effect of corporate cash holdings.With the increasing uncertainty of China’s economic policies,the smoothing effect of corporate cash holdings on innovation has also changed.In the case of uncertain economic policies,the financing constraints imposed on enterprises will also increase,thus strengthening the smoothing effect of corporate cash holdings on innovation.This paper takes 3276 A-share listed companies of China’s Shanghai and Shenzhen stock markets from year 2008 to 2016 as the research object,and uses dynamic panel data two steps System-GMM to establish research model.On the basis of studying the smoothing effect of cash holdings of Chinese listed companies on enterprise innovation,this paper adds the adjustment variable of economic policy uncertainty,analyzes the mechanism from the perspective of financing constraints,and combines the nature of property rights and the scale of enterprises,to study whether the adjustment of economic policy uncertainty in different types of enterprises is consistent.The research proves that there is indeed an innovation smoothing effect in corporate cash holdings,and this effect will be improved when the degree of economic policy uncertainty is increased.At the same time,further research found that the adjustment effect of economic policy uncertainty is more significant in non-state-owned enterprises and smaller enterprises.The conclusions of the study further deepen the understanding of the impact of economic policy uncertainty and the smoothing effect of corporate cash holdings on corporate innovation,and to some extent improve and expand the theoretical research on corporate cash holding and innovation,and for Chinese listed companies to establish reasonable cash holding decisions according to the macroeconomic policy situation,to provides empirical evidence and reference to ensure the continuous and stable investment of innovation.