Private Equity Investment,Financial Redundancy And Enterprise Innovation Performance

With the sustained development of the domestic economy.The innovation becomes the source of the sustainable development of each enterprise.Compared with the developed countries in Europe and the United States,the scale of Chinese enterprises is large,but lack of R & D investment and management capacity.Private equity investment has become an important source of financing for many small and medium enterprises,private equity investment through the choice of investment companies to help enterprises complete the value-added IPO,out of profit.So as an important financial investment tool,the development of small and medium-sized enterprises in China has a great role in promoting.It has been shown that the innovation performance of enterprises is related to the internal and external institutional environment,firm size and profitability.Private equity investment can enhance the value of small and medium-sized enterprises and improve the governance structure to a certain extent.Private equity firms have more diversified innovation characteristics,because private equity firms provide not only for the invested enterprises,as well as the knowledge and resources needed for innovation activities.More specifically,firms with private equity investment backgrounds engage in more and more significant innovation activities than firms with no background in private equity investment.On the other hand,the financial resources are necessary conditions to maintain and promote the innovation activities.The intensity of the R & D activities depends on the quantity of financial resources,but the increase of the financial resources will lead the managers to pursue their own interests.Resulting in inefficient investment activities,thereby affecting the innovation performance of enterprises.Therefore,whether the private equity investment will affect the governance of the invested enterprise,whether it can alleviate the principal-agent contradiction arising from the increase of corporate financial redundancy,has become the focus of academic research,and the main content of this paper.This paper reviews the literatures on the impact of private equity investment on innovation performance and the relationship between financial redundancy and corporate innovation performance in China and abroad.In the part of theory analysis,this paper explained the theory of principal-agent,information asymmetry andorganizational redundancy,and the intrinsic mechanism of private equity investment in enterprise governance and enterprise decision-making is analyzed.Secondly,the theoretical explanation of the situation that the increase of enterprise financial redundancy leads to the conflict of interest and the triggering of self-interest behavior is analyzed,and the effect of redundant financial resources on the principal-agent contradiction between private equity investment and high-risk investment activities is analyzed..And put forward the hypothesis of this paper.In this paper,we take the data of representative GEM companies from 2009 to2014 as the explanatory variables,and take the proportion of the total R & D investment and the number of patent applications as the measure of enterprise innovation.The empirical study of the hypothesis of the empirical analysis,according to which the conclusions of this study and pointed out a number of policy and practical experience.After the theoretical analysis and empirical test,the following conclusions are obtained:(1)Private-equity firms have more investment in innovative R & D than private-equity firms,and the results of innovation activities are higher.(2)Financial redundancy has a "U"-type relationship with the innovation performance of enterprises.Moderate financial redundancy will promote the innovation performance of enterprises.Too much financial redundancy will restrain the innovation performance to a certain extent.(3)the higher the degree of corporate financial redundancy,will positively strengthen the relationship between private equity investment and innovation performance of enterprises,and promote enterprises to invest more resources into innovation activities.This paper uses the method of the combination of theoretical analysis and empirical test to establish the relationship between private investment background,financial redundancy and innovation performance by using financial redundancy as the starting point.Financial redundancy affects the regulation effect of innovation performance,which is a new attempt and exploration.The main contribution of this paper is to enrich the relevant literature on how private equity affects the innovation performance of enterprises,and further explore the principal-agent problem between private equity investment and corporate innovation performance from the perspective of financial redundancy.