Research On The Investment And Efficiency Of R&D

With acceleration of economic globalization and integration, the interdependence of different economic entities has increasingly enhanced, which is mainly manifested as a kind of close cooperation as well as fierce competition. Based on their innovation of technology and advancement of science, western developed economic entities dominate others by controlling the new order of international economy in this long economic battle. As a main participant in market competition, the competitive edge of an enterprise is no longer simply dependent on its possession of those traditional factors of production, such as capital and labor; but is more reliable on the scientific allocation and fair use of science and technology, high value-added intangible assets, and intellectual capital (i.e. research and creative abilities). R&D is a principal way for enterprises to increase research and creative abilities and to enhance core competitive edges. Therefore, it is of strongly practical necessity for our country to reinforce research on the investment and efficiency of R&D in order to fulfill our strategy of indigenous innovation and enhance enterprises’core competitiveness as well as its market value.An enterprise’s R&D will be usually influenced by its environment home and abroad. For an enterprise, on the one hand, there are many inner influential factors such as its scale, internal governance, financial situation, nature of property right, management policy and so on, which have been researched theoretically and tested practically by a larger number of scholars. On the other hand, an enterprise can be affected by external factors such as macroeconomic policy, industry condition, external corporate governance, fundraising environment, etc. The capital market in our country is less developed, still with a financing system centered on band. As a result, this thesis mainly focuses on the impacts of debt financing on R&D in financing structure under the condition of other assumptions being unchanged.This thesis combines the theory and empirical investigation, taking the industry of information technology companies as a sample, firstly to research the relation of debt financing and investment in R&D of an enterprise. It tries to analyze the internal mechanism of debt financing’s impact on the investment in R&D of an enterprise by use of information asymmetric theory and agency theory. And also it divides debt financing into three dimensions as debt sheet, debt duration and debt source in order to study on the intensity of investment in R&D. To some extent, it can enrich the research of capital structure theory which is provided with a more consolidated micro-foundation. Secondly, it studies the role of regulation of debt financing to the efficiency of R&D. In essence, an enterprise’s R&D is a kind of investment. Researching on investment efficiency is an important topic in all investment activities. Currently scholars’researches on investment efficiency mainly focus on the field of economics, management science, financial investment, etc. There are few researches from the aspect of finance and even less ones from the angle of debt financing. From finance studies, an enterprise’s investment efficiency of R&D is finally manifested in financial performance and enterprise value. Thus, researching the relation of investment in R&D of an enterprise and enterprise value is just a research on an enterprise’s investment efficiency of R&D. In general, the more unit enterprise value is caused by investment of R&D, the higher investment efficiency of R&D gets. The scholars domestic and overseas have already deepened the research of the aspects of investment in R&D of an enterprise and enterprise value, most of who think that there exists a positive correlation between investment in R&D of an enterprise and enterprise value of which those researches are mainly on the direct relation. That is, it talks about their relation in a static way, not considering the change of an enterprise’s efficiency of R&D along with the change of enterprise environment. It is exactly true that there will be different output efficiency under different management environment, even though the scale of investment in R&D is the same. This thesis tries to study the influence of debt financing on an enterprise’s efficiency of R&D based on the contingency theory, that is, it researches the role of regulation of the relation of an enterprise’s investment in R&D and enterprise value. Therefore, on the assumption that an enterprise’s other management environment is unchanged, this thesis researches the debt’s role of regulation of the relation of investment in R&D and enterprise value from three dimensions as debt financing scale, debt financing duration and debt financing source on the basis of taking debt financing as a regulated variable.This paper studies how debt financing influences corporation’s R&D input and efficiency via debt financing scale, debt maturity of debt financing and debt financing source. The following is the organization this paper:chapter one for introduction, chapter two for references, chapter three for theories analysis, chapter four for design of research, chapter five for evidence analysis, chapter six for conclusions, recommendations and limitations.Chapter one concludes research background, research purpose, research organization, research approaches and expected conclusions.Chapter two concludes references about the in-and-out environment of corporation’s influence on R&D, the relationship between debt financing and R&D investment and debt financing’s influence on R&D efficiency, then briefly summarizes and comments theses references.Chapter three analyzes the relationship between debt financing and R&D investment through combining Theory of Asymmetric Information with Agency Theory and also analyzes how debt financing regulates R&D efficiency based on Contingent Theory.Chapter four consists of proposing research hypothesis, introduction of samples and data source and offering a guided-tour of key variables and study modes.Chapter five analyzes, through the test of solid examples, the relationship between debt financing and the intensity of R&D input and how debt financing regulates R&D efficiency.Chapter six summarizes the results and conclusions of research and proposes some related recommendations as well as some limitations of this paper.The major conclusions of this paper can be summarized as two aspects.(1) The existed research materials shows how debt scale affects the intensity of R&D input and how it regulates the relationship between the intensity of R&D input and corporation’s value, which can not be recognized and understood deeply without incorporating debt financing, the major financing method in China, debt source and debt maturity.(2) choosing debt financing as the regulated variable to study the relationship between the intensity of R&D input and corporation value. The already-existed research literature mostly choose enterprise size, corporation governance and financing environment as the regulated variable to study the relationship between the intensity of R&D input and corporation value. Most already-existed researches and scholars focus their energy on studying he relationship between the intensity of R&D input and corporation value without considering debt financing. To sum up, employing debt financing as the regulated variable to to study the relationship between the intensity of R&D input and corporation value not only enriches Contingent Theory but also recognizes and understands this kind of relationship more comprehensively and profoundly.