Impact Of Exchange Rate Uncertainty On Corporate Innovation Investment

R&D and innovation activities are the process by which companies invest large amounts of capital in intangible assets.They are characterized by greater risks but higher returns.Therefore,the uncertainty of exchange rates has two opposite effects on R&D investment.The positive effect of exchange rate uncertainty on R&D investment is reflected in the higher competitiveness by increasing R&D investment.It will also reduce R&D investment to avoid innovation failures.Due to the strengthening of international trade protectionism and the occurrence of "reverse globalization",the uncertainty of exchange rates is increasing,and the exchange rate risks faced by enterprises are increasing.Therefore,it is necessary to study the impact of exchange rate uncertainty on R&D investment,and to explore R&D investment decisions of enterprises in uncertain environments.Based on Lee and Shin(2000),this article uses 2008-2015 listed companies as a sample and uses the systematic GMM method to further study the impact of industrylevel exchange rate fluctuations on corporate R&D investment.In addition,based on the research results of Li(2016),this paper further divides exchange rate fluctuations into two parts,to study how jumps and smooth fluctuations affect corporate R&D investment.The empirical results show that the increase in the exchange rate uncertainty will lead to an increase in the company's R&D investment.To further study the impact of exchange rate jumps and smooth fluctuations,empirical results show that the continuous part of exchange rate fluctuations will lead to an increase in corporate R & D investment,while the jump part will lead to a reduction in enterprise R&D investment.Through research on samples of different market forces and irreversible levels of investment,it is found that the stronger the market power,the more enterprises prefer to increase R&D investment in an uncertain environment;and the companies with a higher degree of irreversible investment will reduce R & D investment.The research results of this paper can enrich the theory of investment uncertainty and provide insights for companies facing exchange rate risk.