Research On Proactive Zero-leverage Financial Flexibility And Innovative Investment

Traditional capital structure theory believes that companies can achieve the target capital structure by rationally arranging the ratio of their equity capital and debt capital,helping companies minimize the cost of capital and maximize their value.Moreover,liabilities have income,and the interest on liabilities can be deducted before tax to obtain tax shield income.However,some companies in the capital market choose very low leverage for a long time,and even adopt extreme zero-leverage that completely abandon interest-bearing liabilities.There is a "the mystery of zero-leverage firms".This phenomenon has received increasing attention from scholars.Most of the existing literatures use empirical research to analyze the zero-leverage strategy of enterprises from financing constraints,cash flow,and manager characteristics.Different from the existing research,this paper uses case analysis to take Venustech as the research object,and firstly distinguishes between two cases of zero-leverage passive selection and active selection.Then this article establishes the connection between the enterprise's active choice of zero-leverage strategy and the acquisition and maintenance of financial flexibility.Following the research direction on the impact of innovation investment,and combining the characteristics of the industry of the case company,the situation of Venustech's innovation investment was discussed.Through the analysis of this paper,we verify that there is a phenomenon that enterprises choose zero-leverage in Chinese capital market,and find that case company have obtained the overall financial flexibility by actively choosing a zero-leverage strategy,and there is an incentive to actively choose zero leverage.Through two aspects of innovation input and innovation output,this paper verifies that the case company,under the active choice of zero-leverage strategy,has abandoned the financing method of interest-bearing liabilities,but can still maintain a high level of innovation investment.At present,China is in the context of economic transformation and the government's vigorous promotion of innovative development.The research in this paper has certain theoretical and application value,and provides a certain reference for companies to rationally arrange capital structure,obtain and maintain financial flexibility,and increase innovation.Especially for companies with strong profitability and sufficient internal financing,they can actively choose a strategy with zero leverage.Under the premise of full cash utilization and scientific management of enterprises,by actively selecting zero leverage,it can accumulate financial flexibility for enterprises,help enterprises cope with risks and seize development opportunities,and maintain a high level of innovative investment to achieve sustainable development.