Research On The Effect Of Cash Flow On Innovation Activities In Family Business

Family business is a common and existing organization in the world.Since the reform and opening up,family business have grown rapidly and become an important part of the national economy in China.With the continuous development of the times,the science and technology are updated faster and faster,if family business want to survive in the fierce market competition and pass on the enterprise's long-term legacy in the family,family business will have to keep up with the trend of the times,conduct scientific and technological exploration and innovative research and development.However,the resource shortage of family business is in contradiction with the urgent need for innovation.In view of this,it is of great practical and theoretical significance to study the relationship between cash flow status and innovation in family business.In this paper,we use listed family business as research objects,take the sample of family businesses listed on A shares in China for 2010-2015 years,construct an empirical analysis model and use 904 family business' s unbalanced panel data to regress.This paper discusses the influence of cash flow on the innovation investment of family business from the angle of cash flow domination and stability,and analyzes the regulating function of the internal financial environment: the business performance,the debt level and the external market environment.Finally,this paper further study the influence of family business cash flow domination and stability on innovation output and innovation efficiency.This paper can supplement the research on family business' s innovation theory,and provide a theoretical basis for family business to make innovation decisions.Research results show that: First,the domination and stability of cash flow can effectively promote the innovation of family business,and the more cash flow that firm can freely control,the larger cash flow rights and the more stable the cash flow,then the more innovative inputs family businesses will take.Second,business performance and debt level have a significant regulatory effect on the relationship between cash flow and innovation investment in family business,and they mainly affects the effect of free cash flow and cash flow stability on innovation investment;while the market environment doesn't play a significant regulatory role,but a good market environment will increase the enthusiasm of family business to innovate.Third,the free cash flow positively influences the innovation output of enterprise through innovation investment,and has a significant positive impact on the innovation efficiency;the family cash flow right has no obvious influence on the innovation output and innovation efficiency;the cash flow stability positively affects innovation output,but negatively affects innovation efficiency in family business.In general,the cash flow dominance and stability play an important role in supporting innovation in family business,and the business performance and the level of debt have a significant regulatory effect on this support.So,Family business should manage their cash flows to ensure that they have sufficient and stable free cash flow and provide the basis and guarantee for enhancing their innovation capabilities,to ensure that the family business is evergreen.This paper is divided into five parts.The first part is the introduction,including the background and significance of the topic selection,research methods,research ideas,content arrangement and so on,and combs the related literature on the cash flow and innovation of family business.The second part defines the related concepts,expounds the relevant basic theories.The third part is the research design of this paper,including the hypothesis,the definition of variables,and the construction model.The fourth part is the empirical results and analysis,including the definition of sample sources,the main empirical conclusions and expansion analysis.The fifth part is the conclusion and the prospect.