Research On The Correlation Between Cash Holdings And Corporate R&D Investment

Within the situation of fierce international competition,technological innovation has become a source of economic growth for every country,and has a higher contribution to economic growth. Since the founding of New China,the Chinese government has attached great importance to the development of science and technology,our national competitiveness ranking also has significantly increased.The experts pointed out that since the1990s, China has entry into the fastest-growing period, and to2020, China’s national competitiveness will be reached world leading level, may enter the world’s top lO.Investment in R&D activities is an important manifestation of the scientific and technological innovation, both China’s investment in R&D and R&D investment intensity have a continually improve,But from a global perspective,China’s R&D investment intensity is still very great gap with developed countries.Enterprises are the main body of the national technology innovation, improve the R&D investment situation has great significance to enhance the competitiveness of the country,and has a greater significance to enhance the core competitiveness of enterprises.There are many impact factors of R&D investment,such as company size,capital structure,the nature of the industry and so on.The cash holdings can be considered as the most direct impact factor,studies have shown that the primary factor that hinder technological innovation in China is capital.But most of the existing study paid little attention to this point,and this paper mainly studies the relationship between cash holdings and R&D investment.The main impact factor of R&D investment is different at different growth conditions,capital problem also plays a different role.So this paper also research the difference of the relation between cash holdings and R&D investment at different growth condition.This paper is divided into five parts:The first part illustrated the research background, significance and research methods, and then summarized recently study status at home and abroad;The second part introduced related concepts about cash and research and development and the trade-off theory, the optimal allocation of resources theory and cost-effectiveness theory,then discussed the relation of cash holdings and investment in research and development from these angles;The third part gave a brief analysis of the information disclosure of listed companies’ R&D spending at present, and pointed out possible problems, and then theoretical analysis the relation of cash holdings and investment in R&D, as well as the difference correlation under different growth conditions;The fourth part selected2009-2011IT industry and biotechnology, pharmaceutical products industry listed companies as the research object, then used the regression analysis empirical testing the correlation between cash holdings and R&D investment.The empirical results show that cash holdings is positively related with R&D spending,and this correlation is more significant in high-growth companies;The fifth part summarized the research conclusion of this paper,and then based on this, proposed some relevant policy advice and the future prospects.There are some possible innovations of this paper:(1) Innovation about research perspective.Starting from the growth characteristics,this paper build the growth index evaluation system, then calculated the company’s growth comprehensive score, combined with linear regression model examined the difference of relations between cash holdings and R&D investment under different growth conditions,provided a new perspective of the study of cash holdings and R&D investment.(2) Innovation about main research objects.Research for cash holdings in the past has focused on the influencing factors and holding motivation,and the study of R&D investment was also focused on the influence factors.But as the most direct influence factors of enterprise’s R&D investment,cash holdings didn’t get the corresponding attention.This paper choose IT industry and biotechnology, pharmaceutical products industry as the objects,researched the impact of cash holdings to R&D investment, which could enrich and expand the research contents of R&D investment,also complemented the research on cash holdings.