The Impact Of Increased Business Revenue On R&D Investment

The literature on R&D investment in foreign countries is very rich.Due to the limitation of data availability,domestic research on R&D investment is more from a macro perspective or policy perspective,and the research literature on R&D investment of corporate performance is very scarce.This paper uses the financial data of listed companies in the CSMAR database from 2008 to 2014 to study the impact of increased business revenue on R&D investment.Exogenous policy changes and instrumental variables are used to increase the reliability of the results to address endogeneity.In 2012,China launched the pilot program of “replacing BT with VAT” in seven industries in some regions.The government's implementation of the " replacing BT with VAT " is aimed at solving a series of problems such as the repeated taxation caused by the long-standing business tax and value-added tax in China and the incompleteness of the VAT deduction.When the seven areas of the pilot business are included in the business scope of the pilot area,the effect of deepening the division of labor will be deepened,and the deepening of the labor union will increase the business income of the enterprise.This paper analyzes the impact of “replacing BT with VAT” on the operating income of the experimental group through the double difference model.The empirical results show that the “replacing BT with VAT” does increase the operating income of the experimental group,which is like an exogenous shock to the experimental group.The business income of the company has increased.Then use the " replacing BT with VAT " incident as a tool variable to analyze the impact of the increase in operating income on the R&D investment of enterprises.The empirical results show that the increase in business income has increased the R&D investment intensity of enterprises.The empirical results are also consistent with the results of the theoretical analysis.This paper analyzes the theoretical basis of operating income to promote R&D investment: the characteristics of R&D investment make enterprises generally have financing constraints on R&D investment,and “replacing BT with VAT” increases the internal capital of enterprises by increasing the operating income of enterprises,thus alleviating financing constraints.Promoted R&D investment.The R&D investment of enterprises has been tested theoretically and empirically by financing constraints.The reasons why R&D activities are constrained by financing in theory include the information asymmetry of R&D activities,the moral hazard brought by principal-agent theory,the impact of capital structure on R&D investment,and taxation.The existence of this has led to large differences in internal and external costs.These reasons lead to enterprises being constrained by external financing.When the internal funds increase,the R&D investment will increase,and the increase of operating income will obviously promote the accumulation of internal funds.The increase of operating income is brought about by the deepening of the division of labor.This paper also analyzes the theory.During the parallel period of the two taxes,some enterprises will internalize some service organizations for the purpose of tax planning,and the existence of taxation distorts the behavior of enterprises.The " replacing BT with VAT " has brought about a deepening of the division of labor.Enterprises will not engage in businesses that they are not good at,and that enterprises are more specialized,and specialization will increase the operating income of enterprises.Theoretically,these analyses have been confirmed by empirical results,so the paper concludes that the increase in business revenues has contributed to the increase in R&D investment.The reason may be that the R&D investment of enterprises is subject to financing constraints,and the operating income is due to an exogenous event.After the increase,the company released liquidity due to the accumulation of internal funds,alleviating external financing constraints,and thus increasing R&D investment.