R&D Investment,Financial Constraints And The Value Of Cash Holdings

"Cash is king" is an important concept in financial management,holding cash is pursued by the enterprise,becoming an important line of defense to avoid risk for enterprises,how the marginal value of cash holdings plays,attaches great importance to the management of the enterprise.What is the value of the cash holding by enterprises in the condition of financial restraints,which is a hot spot of the academic circles and practice circle.Existing studies document that enterprises engaged in R&D funding sources are mostly owned enterprises,in the case of financing constraints of enterprises,financing channels are limited,companies can control the cash is limited.R&D investment for enterprises,not just a big money in the current expenditure,and the R&D effects can often take a period of time to show up.This feature allows companies’ high-level to carry out R&D investment decisions have to consider their own financial situation.The enterprise will put the cash into the R&D activities,whether the relationship between the value of cash holding and financing constraints is derived from the nature of investment,is worth studying.This paper selects all the A-shares data of listed companies in China from 2008 to 2015 as a sample to study the relationship between financing constraints and value of corporate cash holdings,and further examines the marginal value of cash holdings in different levels of R&D investment.This paper finds that:(1)Among firms with R&D investment,the marginal value of cash holdings is significantly higher for financially constrained firms than unconstrained ones,whereas this difference is weak among firms without R&D investment;(2)Among firms with high R&D investment intensity,the marginal value of cash holdings is significantly higher for financially constrained firms than unconstrained ones,whereas this difference is weak among firms with low R&D investment intensity.Furthermore,by analyzing the mechanism of the difference of marginal value of corporate cash holdings caused by R&D participation,this paper finds that the efficiency of R&D investment is higher than that of non-financing constraints,which is the key to the marginal value of cash holdings.Combined with the financing constraints and corporate R&D investment perspective of the corporate cash holdings of the marginal value,this paper extends the cash literature by showing that the value of cash holdings is affected by the status of financial constraints and the intensity of R&D investment jointly,which can provide reference for the listed companies to make cash holding decisions.