Financing Constraints, Financial Flexibility and Corporate Sustainability Innovation

Abstract

Continuous innovation plays an important role in promoting high-quality economic development and is a core driver for companies to maintain long-term competitive advantages. Financial flexibility, as a comprehensive regulatory capability, can adapt to environmental changes and prevent risks, and has an important impact on sustainable corporate innovation. Using the panel data of A-share listed companies in Shanghai and Shenzhen Stock Exchange from 2012 to 2020, this paper examines the impact of financial flexibility on corporate innovation sustainability and analyses the moderating effect of financing constraint. The research shows that total financial flexibility promotes innovation sustainability, single cash flexibility and single debt flexibility positively affects innovation sustainability, and financing constraints positively moderate the relationship between financial flexibility and corporate sustainability innovation. Compared with state-owned enterprises, the promotion effect of financial flexibility is greater in non-state-owned enterprises. The findings of this paper provide a decision reference for corporate sustainability innovation.