Research On The Influence Of Enterprise Leverage Ratio On Innovation Capability

Innovation is not only an important source of national progress,but also the first driving force of enterprise development.Generally speaking,innovation activities have long cycle,large investment and high risk,which means that it is difficult to support the continuous development of innovation activities only relying on the original capital accumulation or endogenous financing of enterprises.Therefore,using leverage to absorb external funds has become an important means for enterprises to improve their innovation ability.However,over reliance on leverage will make the leverage ratio of enterprises rise rapidly,which will aggravate the agency problem,increase the probability of enterprise bankruptcy,and then hinder innovation.At present,deleveraging is an important part of deepening the supply side structural reform,but deleveraging is not equal to low leverage or no leverage.Otherwise,enterprises may fall into cash flow difficulties and inhibit the improvement of innovation ability.Therefore,how to balance the relationship between reducing leverage and promoting innovation ability is very important.In addition,information asymmetry widely exists in China’s capital market,which may lead to the inability of enterprises to raise enough funds when trying to use leverage to absorb innovation funds,which will hinder the development of innovation activities.At this time,the "visible hand" of the government is urgently needed to play a signaling role.Government subsidies are an important signal of good for enterprises,and may play a regulatory role in the process of enterprise leverage affecting innovation ability.Aiming at the above problems,this paper deeply analyzes the internal mechanism of enterprise leverage affecting innovation ability,explores the relationship between them,and analyzes the regulatory effect of government subsidies on the relationship between them.Firstly,the paper puts forward research hypotheses according to relevant theories.Secondly,using the data of Chinese A-share listed companies from 2010 to 2017 and the two-way fixed effect model to test the relationship between enterprise leverage and innovation ability.Then,in further analysis,verify the regulatory effect of government subsidies on the relationship between the two,and test the impact of leverage on innovation ability from the perspective of leverage heterogeneity and enterprise heterogeneity.Finally,some suggestions are put forward according to the research results and the current situation of our country.The empirical results show that:(1)the relationship between enterprise leverage and innovation capability is "inverted U",and the inflection point of leverage ratio is about 51.6%,which shows that there is a leverage ratio range that can improve its innovation capability for enterprises.(2)Government subsidies play a regulatory role in the process of enterprise leverage on innovation ability,which can strengthen the promotion of leverage on innovation ability and weaken the inhibition of leverage on innovation ability.(3)The impact of enterprise leverage on innovation ability will vary according to the nature of leverage.Compared with bank credit leverage ratio and bond credit leverage ratio,commercial credit leverage ratio is more helpful to promote the improvement of enterprise innovation ability.(4)The impact of enterprise leverage on innovation ability will vary according to the nature of enterprises.Compared with small enterprises,the leverage ratio of enterprises that can improve innovation ability that large enterprises can bear is relatively high.For high-tech enterprises,enterprise leverage is the key factor affecting innovation ability,and there is still room for leverage.However,for non-high-tech enterprises,enterprise leverage is not the key factor affecting innovation ability.Based on the above research results,this paper puts forward relevant suggestions from the perspectives of government,financial institutions and enterprises.The government should encourage the development of equity financing to reduce the overall leverage level of enterprises;Continue to promote the structural deleveraging policy;Reasonably select subsidy objects to help enterprises innovate;Guide financial institutions to innovate products and services and give preferential credit to innovative enterprises.Financial institutions should establish friendly and cooperative relations with governments and enterprises to alleviate information asymmetry.Enterprises should properly use debt and reasonably use debt funds;Strengthen the risk control of liabilities;Strengthen information disclosure and establish a good partnership with financial institutions;Avoid over reliance on debt for innovative investment,so as to prevent falling into financial difficulties and even facing bankruptcy.