Institutional Investors, Financial Redundancy And Corporate R&D Investment

The report of the 19 th CPC national congress put forward that “Innovation is the primary driving force for development and the strategic support for building a modernized economic system.” Innovation is also essentially an investment activity.Innovation is an investment with high return and high risk.How much capital to invest in the research and development of new technologies,new products and new processes is a major issue that every listed company must face.There are a variety of factors that affect enterprises' R&D investment.Shareholders of listed companies have right to decide how much they invest in research and development.Meanwhile,the financial redundancy of listed companies will also affect the investment in research and development.This paper mainly discusses the impact of special shareholders such as institutional investors on the company's R&D investment,and how institutional investors can play a role in promoting enterprise innovation in the case of financial redundancy.In the study of institutional investors,according to whether there is a close business relationship between institutional investors and listed companies,this paper divides institutional investors into pressure-resistant type and pressure-sensitive type.By reviewing previous literatures,this paper first deduces the relationship between heterogeneous institutional investors and R&D investment as well as the regulatory role of financial redundancy from the perspectives of principal-agent theory,risk preference theory and resource redundancy theory.Secondly,1345 a-share listed companies in Shanghai and Shenzhen were selected as the research samples from the relevant data of five consecutive years from 2013 to 2017,and the equilibrium panel data fixed effect model was selected for empirical regression.Finally,this paper further research on property rights nature and industry category will affect heterogeneity of institutional investors and the relationship between R&D input,and whether it will affect the financial redundancy of R&D,the all samples are divided into state-owned enterprises and private enterprise groups as well as the manufacturing and non-manufacturing group,grouped regression.In this paper,it is found that,on the whole,pressure-resistant institutional investor shareholding has no effect on enterprise R&D investment,while pressure-sensitive institutional investor shareholding has a significant positive correlation with enterprise R&D investment.From the perspective of the whole industry,the more financial redundancy an enterprise has,the more R&D input it will have.In the case of financial redundancy,pressure-resistant institutional investors will act as a hindrance to enterprises' R&D investment,while financial redundancy will weaken the role of pressure-sensitive institutional investors in promoting enterprises' R&D investment.Further research shows that the nature of property rights and industry categories have no impact on the relationship between pressure-resistant institutional investors and R&D investment.In state-owned and manufacturing listed companies,there is a significant positive correlation between pressure sensitive institutional investors and R&D investment.In private and non-manufacturing listed companies,financial redundancy is positively correlated with R&D investment.This paper enriches the research on institutional investors' participation in corporate governance.Institutional investors have not been developed in China for more than 20 years,and most existing literatures analyze institutional investors as a whole,rarely considering the heterogeneity of institutional investors,and few scholars consider the impact of institutional investors on R&D investment.This paper also provides a new breakthrough for how to promote listed companies to increase research and development investment,such as supporting pressure-sensitive institutional investors to hold shares,guiding pressure-resistant institutional investors to actively participate in corporate governance,and making appropriate financial planning according to their actual situation.