Research on Mechanism of Government Subsidy to Promote the Growth of Innovative Investment

Tangmei Yuan, Xiulian Chen, Wei Fu

Business School of Linyi University, Linyi, 276005, China

Abstract: Based on the cash holdings of enterprises, this paper studies the growth of innovation investment transmission mechanism of incentive policies and the efficiency of innovation investment, in order to pro-vides a theoretical basis at the micro level for the formulation and adjustment of innovation policies. Taking China's a-share listed companies from 2012 to 2015 as samples, the mediating effect of cash holdings on the relationship between Government subsidies and R&D investment was tested by multiple linear regression. The results show that :(1) Government subsidies help companies to improve R&D investment; (2) Govern-ment subsidies make enterprises tend to use the increased cash holdings directly to increase their R&D in-vestment. (3)Cash holding is an intermediary variable between government subsidizes and R&D investment. That is to say, the macro-innovation incentive policies of government subsidizes have the promotion effect on the growth of innovation investment based on the conduction of cash holdings. Finally, some policy suggestions are put forward to promote enterprises to increase innovation investment.

Keywords: Cash holding; Innovation investment; Government subsidizes