The threshold effect of financing channels on the R&D investment: evidence from the manufacturing companies in China

Under limited technological resources, optimising financing channel to R&D investment has important theoretical and practical implications. This paper analyzed the threshold effects of internal financing channels and external financing channels on the R&D investment using 692 manufacturing listed companies' data from 2008 to 2015. And five threshold factors including the debt level, profit level, operational capacity, company's size, and bank loan ratio were used to estimate the threshold effects of different financing channels. The results show that internal financing has a positive threshold effect on R&D investment when the debt level is lower than the threshold value; equity financing is negatively related to R&D investment; debt financing has a significant negative effect on the R&D investment under certain threshold levels; government subsidies promote the R&D investment extremely for the companies with certain size and scale effect. Besides, this paper proposed corresponding suggestions for different threshold values and financing channels.