The Smoothing Effect Of Cash Holdings On R&D Investment Of Enterprises

Innovation is the key to the vitality of an enterprise and research and development is the necessary investment of enterprise 's innovation.One of the most important characteristics of R&D activities is high adjustment cost.Therefore,enterprises have the motivation to keep R&D activities smoothly and continuously.In the actual operation of the enterprise,many factors,such as financing decision,?working capital management cash flow strategy and other factors,affect the source of research and development funds.Cash is recognized as the most liquid asset,so it is very important to use certain cash reserving as the buffer pool.This paper will further analyze the more general characteristics of cash holdings and R&D investment.In this paper,I use the data of security department named Guo Taian from 2010 to 2017 years that listed companies as research samples.First,I make a status of descriptive statistics and analysis which contains the history of Listed Companies in China's research activities,characteristics,industry distribution.Then,I made the empirical research about the relationship between cash holdings and R&D investment based on the model.Furthermore,I compared and analyzed the effects of financial constraints and financial development on the smoothing effect of cash holdings by grouping these two factors.This paper finds three conclusions.The first one is that the company which is holding cash has the function of smoothing R&D investment.The second one is that the more serious financing constraints,the smoothing effect of the cash holdings is more obvious.The last one is that compared with the government-controlled enterprises,the smoothing effect of is more significant in the people's enterprises.With the improvement of financial development level,the effect of cash holdings on R&D investment is weakening while the difference between state-owned and non-state-owned enterprises is also decreasing.