The Moderating Effect of External Financing on the Relationship Between Innovation Input and Enterprise Performance Based on the Moderating Effect Model of Two Interactions

The Moderating Effect of External Financing on the Relationship Between Innovation Input and Enterprise Performance Based on the Moderating Effect Model of Two Interactions

Jing Feng, Yonghong Yao, Qiaowen Yang
Copyright: © 2022 |Pages: 22
DOI: 10.4018/IRMJ.304449
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Abstract

This article takes China's high-tech companies from 2010 to 2019 as a sample to explore the correlation between innovation investment and corporate performance, and the moderating effect of external financing on innovation investment and corporate performance. The main research conclusions are as follows: (1) Innovation investment has a positive impact on corporate performance. (2) Equity financing has a positive regulatory effect on innovation input and corporate performance. (3) Debt financing has a negative regulatory effect on innovation input and corporate performance. The negative adjustment effects of debt financing from strong to weak are: bond financing, long-term borrowing, short-term borrowing, and commercial credit.
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Literature Review

The Relationship Between Innovation Input and Corporate Performance

Sougiannis, (1994) used the Ohlson model to verify the positive correlation between innovation input and corporate profitability. The market value of a firm's stock (Pt) equals the present value of its expected future dividends (Et [dt]) discounted at the risk–free interest rate, according to the Present Value Relation (PVR) of the dividend discount model (Rf). At the same time, (Zhu et al, 2018) also believes that the longer the investment in innovation, the greater the improvement in corporate performance. But (Hitt et al, 1994) found that innovation investment is negatively correlated with company performance. At the same time, (Guo & Ye, 2017) studied the correlation between social responsibility, innovation ability and performance level, and concluded that there is a negative correlation between corporate innovation ability and corporate performance.

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