The Relationship Between Enterprise Financial Risk and R&D Investment Under the Influence of the COVID-19

Abstract

The COVID-19 pandemic has dealt a considerable blow to the development of Chinese enterprises. Therefore, exploring how to reduce the enterprise financial risk under the impact of the COVID-19 has become a current research hotspot. We select the data of 3,098 A-share companies in the quarters of 2019 and 2020, use the Z-score model to reasonably evaluate enterprise financial risk, and analyze the impact of Research and Development (R&D) investment on enterprise financial risk under the COVID-19.The results show that: ① The COVID-19 pandemic has increased the number of high-risk enterprises. ② R&D investment can effectively reduce the enterprise financial risk, and enterprises that attach importance to scientific research are relatively less affected by the COVID-19. ③ Compared with non-state-owned enterprises, R&D investment under state-owned enterprises can better help enterprises reduce financial risk. ④ When the enterprise financial risk is lower, the role of R&D investment in reducing financial risk is more significant. With the increase of financial risk, the effect of R&D investment on it is weakened. The research results are beneficial to help enterprises to correctly assess their financial risks during the COVID-19, so that enterprises can reasonably invest in research and development, and ultimately ensure the sustainable development of enterprises under the COVID-19.

Financial Inclusion Through Technology: A Review of Trends in Emerging Markets

“…Moreover, the crisis has drawn attention to the strategic responses of Chinese firms on digital transformation, highlighting the importance of accelerating digital transformation to enhance competitive advantage (Wu et al, 2023). Lessons learned from the pandemic include the need to explore ways to reduce enterprise financial risk, the importance of leadership in crisis-induced digital transformation, and the impact of the pandemic on financial development and financial inclusion (Li et al, 2022;Bartsch et al, 2020;Ojong & Asongu, 2021). The crisis has also shed light on the limitations and barriers to the implementation of digital innovations, including legal, ethical, and privacy barriers, as well as organizational and workforce barriers (Budd et al, 2020).…”