Financial Connections Promote Innovation Investment

Innovation is an important "booster" for a country's economic and social development,and a source of power for improving international competitiveness.Private enterprises are an indispensable force to promote national science and technology innovation,and the release of their innovative vitality can reflect the level of innovation in the entire country to a certain extent.However,innovation is also a hugely expensive activity,and the risk is high,the investment cycle is long,while the private enterprises are mostly small in size and lack of risk tolerance.“Financing difficulties” have become the “Achilles' heel” of private enterprises.In order to obtain financing convenience,many enterprises actively establish financial connection,and whether this method can alleviate financing constraints and thus increase enterprise innovation investment is the research focus of this paper.This paper summarizes the research literatures on corporate financial connection,financing constraints and innovation investment,and thus proposes research hypotheses and design empirical models in combination with relevant theories.Taking the 2009-2017 Chinese listed private manufacturing enterprises as a sample,analyzing the impact of executive financial background on corporate financing constraints and corporate R&D investment behavior,as well as the relationship between corporate financial connection,financing constraints and R&D investment.By empirical research,the following conclusions are drawn:(1)Most private manufacturing enterprises in China employ financial institutions as executives of the company,and the company mainly employs senior executives in the background of banks and brokerages.(2)Empirical evidence shows that financial connection can significantly alleviate corporate financing constraints and promote corporate innovation investment.(3)The mitigation of financing constraints has played a mediating role in the process of financial connection promoting enterprise innovation investment.This paper explores the relationship and mechanism of corporate financial connection,financing constraints and innovation investment,enriches the research of economic consequences of financial connection,and provides new ideas for enterprises to ease financing constraints and increase investment in innovation.