Research On The Impact Of Firm Leverage On Total Factor Productivity

The real economy is the foundation of a country’s economy and an important support for building strategic advantages for future development,while the manufacturing industry is the cornerstone of the real economy,to achieve highquality development of the manufacturing industry in order to enhance the competitiveness of China in the international market.China has achieved rapid economic development in the past decades by relying on the crude expansion method,and single-factor productivity such as labor productivity and capital productivity is the common index used to measure the local production efficiency.However,at this stage,the economic growth momentum has gradually changed from relying on factor inputs to relying on technological progress and resource allocation optimization,with more emphasis on qualitative improvement rather than quantitative accumulation.In the current critical period of economic transformation and upgrading,single factor productivity has greater limitations in the measurement of comprehensive efficiency and cannot effectively reflect the comprehensive quality level of China’s economic development.The report of the 19 th Party Congress for the first time puts forward the requirement of "improving total factor productivity",emphasizing the importance of total factor productivity in the efficiency-based economic growth.Total factor productivity refers to the additional production efficiency achieved under the established conditions of various factor input levels,which can comprehensively measure the output efficiency of all observable factor combinations,and is an important indicator to measure the quality and development potential of economic development.The development of China’s manufacturing industry has already entered the assertive stage of climbing over the threshold,and enhancing the total factor productivity of manufacturing enterprises is a major issue facing the economic development of China at the current stage.Enterprise development is inseparable from the strong support of capital,and the leverage level will,to a certain extent,affect the R&D and innovation activities of enterprises,and have an effect on the technological progress and technical efficiency improvement of enterprises,thus affecting the total factor productivity of enterprises.Therefore,this paper takes manufacturing enterprises as the research object and studies the impact of enterprise leverage on total factor productivity and its mechanism of action,which is important to achieve high-quality development of manufacturing enterprises.This paper explores the possible non-linear effects of manufacturing enterprise leverage on total factor productivity from the perspective of micro enterprises through theoretical analysis,and uses the panel data of China’s A-share listed manufacturing enterprises from 2010 to 2020 as a sample to test the hypothesis using a fixed-effect model.On this basis,R&D investment is introduced as a mediating variable,and the mediating effect model is used to test whether R&D investment is an important transmission mechanism for corporate leverage to affect total factor productivity.The heterogeneous impact characteristics of manufacturing firms are further analyzed and compared in groups,taking into account the differences in the nature of ownership,the region they are located in and the financing constraints.The paper concludes with a robustness check of the empirical results by changing the measurement index and changing the research sample,and an endogeneity check by the instrumental variables method to ensure the reliability of the research results.The main findings of this paper are as follows:(1)There is an inverted Ushaped characteristic between enterprise leverage and total factor productivity,with the critical value of leverage inflection point being 72.77%.(2)R&D investment plays a mediating role between enterprise leverage and total factor productivity,and the relationship between enterprise leverage and R&D investment is inverted Ushaped.R&D investment then affects total factor productivity through the inverted U-shaped effect of low level promotion and high level suppression,contributing to the non-linear effect of enterprise leverage on total factor productivity.(3)The heterogeneous characteristics among different types of firms cause differences in the relationship between firm leverage and total factor productivity.Both stateowned and non-state-owned enterprises have an inverted U-shaped relationship between leverage levels and total factor productivity,but the critical value of the leverage inflection point for state-owned enterprises(66.08%)is significantly lower than that for non-state-owned enterprises(77.31%),implying that state-owned enterprises have a lower optimal leverage level to promote total factor productivity growth than non-state-owned enterprises.The leverage level of enterprises in the eastern region and enterprises with lower financing constraints have a linear relationship with total factor productivity,and the increase in leverage is conducive to total factor productivity growth,while the leverage level of enterprises in the central and western regions and enterprises with higher financing constraints have an inverted U-shaped relationship with total factor productivity,and the leverage inflection point thresholds are 58.83% and 53.73%,respectively.The optimal leverage level for total factor productivity growth should be chosen reasonably.The findings of this paper provide an important addition to the research in the field related to total factor productivity and provide a new research perspective to explore the effect of leverage level on enterprises.In addition,based on the theoretical analysis and empirical results,this paper has strong implications for enterprises to optimize their leverage structure and promote the transformation and upgrading of manufacturing enterprises,and provides a theoretical and empirical basis for achieving high-quality development of manufacturing enterprises.