Financial Constraints And Investment In Enterprise Innovation

Innovation is the primary driving force for high-quality development in China.How to guide capital flow to the real economy?How to encourage companies to invest in innovation for the long term?These issues are key to "innovation-driven,high-quality supply leading and creating new demand".From the perspective of financing constraints,this paper will study the theoretical mechanism and empirical evidence that affect the periodicity of innovation input,innovation input level and innovation output level of enterprises,and put forward targeted policy suggestions.Firstly,this paper discusses the periodicity of innovation input.In the extended model of Aghion et al.(2012),we introduce two assumptions,namely,innovation capability and financing constraint,and find that the periodicity of firms’ innovation input mainly depends on the level of innovation capability.From the theoretical level,we prove strictly that:when the innovation ability of the firm is low,the innovation input of the firm is usually counter-cyclical,and when the innovation ability is high,the innovation input is procyclical.This provides a unified analytical framework for understanding the disputes about the cyclical behavior of innovation input in traditional literature.Within this framework,we find the types of cycles that have been neglected in the literature.In other words,when financing constraints are very tight,resulting in the lack of funds to hedge the liquidity risk brought by innovation investment,enterprises will choose not to engage in any innovation investment,thus the possibility of no cycle of innovation investment appears.The empirical research also proves the correlation between innovation cycle,innovation capability and financing constraints.Then,this paper studies the relationship between the composition of financing constraints and the level of innovation investment.We extend the model of Aghion et al.(2010)and refine the types of corporate debt financing.According to the different types of collateral,enterprise financing is divided into present value financing(such as equipment mortgage)and discount value financing(such as credit loan).The theoretical model finds that the discount value financing is more conducive to the increase of innovation input,and forms a positive feedback mechanism:higher innovation input will increase the financing ability of enterprises,thus further pushing up the innovation input of enterprises.The empirical results also fully confirm the theoretical findings.We also theoretically prove that,since the innovation output of a firm is equal to the innovation input multiplied by the innovation survival rate,and the survival rate is related to financing constraints,the amount of the innovation input of a firm is not equal to the size of the innovation output.Under the discounted value financing method,enterprises may overinvest in innovation investment,which leads to the lack of sufficient cash flow to hedge liquidity risk in the operation process of enterprises,thus causing the decline of innovation survival rate.Therefore,in the use of discounted value financing,it is necessary to increase the mortgage rate,so as not only to meet the financing needs,but also to improve the ability of enterprises to resist risks.Finally,this paper discusses the impact of Tobin’s Q on the level of firm innovation investment in the presence of financing constraints from three perspectives:empirical,theoretical and empirical.We refine the firm investment data,correct the measurement error of Tobin Q,and use the regression equation to confirm the fact that Tobin Q affects firm innovation input through the mediating effect of financing constraints.On this basis,we extend the model of Aghion et al.(2010)to change the valuation method of corporate mortgage financing from physical mortgage to corporate market value mortgage measured by Tobin Q.The theoretical analysis shows that financing constraint can reduce the level of innovation input.When Tobin Q changes exogenous,that is,the irrational rise of enterprise market value,financing constraint can be eased,and then the increase of enterprise innovation input can be brought about.And with the deepening of enterprise financing constraint,the role of Tobin Q becomes more obvious.Finally,we verify the correctness of the theory through empirical analysis.This paper elaborates the specific forms of enterprise financing constraints from different perspectives,theoretically provides the internal mechanism that financing constraints affect the innovation input cycle,innovation input level and output level of enterprises,and verifies the significance of these channels from an empirical perspective.We believe that improving the innovation capability of enterprises and improving the financial market system are mutually complementary and inseparable.In order to drive China’s high-quality economic development through innovation,the financial market must accelerate reform and provide effective financial support for enterprise innovation.