ABSTRACT
In the process of changing from being factor-driven to innovation-driven in China, there is a complex impact of debt as an important index in the financial accounting of enterprises. We analyze the innovation level of the A-share-listed companies in Shanghai and Shenzhen with relevant data. We found that: (1) When other conditions remain unchanged, the asset liability ratio of the enterprises and the innovation level are inverted U-type relations. (2) The inverted U-type relationship will weaken with the enhancement of enterprise growth and is highlighted by the gradual expansion of the enterprise size. (3) Whether the company is state-owned or not has no obvious influence on this inverted U-type relationship. We suggest enterprises regulate the level of debt and improve their innovation ability by: (1) Paying attention to the level of debt and adjust their financing decision-making; (2) Improving the management system and optimizing the enterprise management; and (3) Building supporting facilities and enhancing innovation capabilities.
