The Study On The Economic Consequences Of Staged Investment By Venture Capital

Venture capital plays an irreplaceable role in the process of upgrading and promoting innovation in traditional industries.With the advent China’s "double innovation" wave,the role of venture capital in promoting economic development has become increasingly prominent.As an important part of venture capital,venture capital investment strategy not only directly affects the performance of venture capital institutions,but also affects the operating performance and financial behavior of invested firms.Therefore,venture capital investment strategy is worthy of in-depth study.The staged investment strategy is one of the most common and effective monitoring mechanisms adopted by venture capital institutions.Staged investment plays a vital role in reducing information asymmetry,minimizing agency costs,reducing the moral hazard behaviors of invested firms,and timely correcting adverse selection.Most existing research mainly explores the role of venture capital based on whether the company has venture capital or not before listing.It is rarely discussed at the micro level whether and how staged investment affects the invested company.Moreover,several relevant research is mostly normative theoretical research,lacking empirical evidence.Therefore,this thesis takes venture capitals that adopt the staged investment strategies as the research object,and explores the economic consequences of the staged venture capital investment from the perspective of invested venture companies.By combining existing data and systematically combing existing literature,this thesis specifically analyzes the impact of staged venture capital investment on the technological innovation of firms before listing,the IPO underpricing on the first day of listing,the investment efficiency and cash dividends distribution of firms after listing.The research of this thesis has important theoretical and practical significance.It will improve the relevant results of existing venture capital,provide more empirical evidence from the Chinese venture capital market,provide guidance for the development of the venture capital industry,and promote the steady and rapid development of China’s venture capital market.First,this thesis examines the impact of staged venture capital investment on the technological innovation of invested companies before they go public.The study finds that,compared with one-time investment,staged investment significantly promoted the technological innovation of the invested company before going public,and the larger number of investments,the stronger the promotion effect.The thesis than analyzes the adjustment effects from the aspects of investment structure,external environment,and characteristics of invested firms,respectively.The results show that,the longer the investment period of the phased investment,the stronger the promotion effect on invested firms’ technological innovation before listing.As for external environment,the thesis finds no adjustment effects.Considering the appropriateness of measurements,it may need to be further analyzed.As for the characteristics of invested firms,it is find that when the firm accepting staged venture capital for the first time,the earlier the development stage of the firm,the stronger the promotion effect.When joint investment behavior occurs in staged venture capital investment,the promotion effect could be more intensified.Based on the above analysis,the thesis examines the mechanism through which staged venture capital investment affect firm innovation from the perspective of corporate governance.The mechanism test find that,staged investment can have an impact on the management structure of the company by assigning directors to the invested company.Phased investment can also affect the resolution of the board by increasing the number of board resolutions.Through the above-mentioned approaches,staged investment can effectively reduce the agency costs,thereby effectively promoting technological innovation.The thesis uses instrumental variable method,PSM method,change estimation method,replacing core explained variable index and other methods to conduct robustness analysis.The research results proves that the original research conclusion is robust.Secondly,the thesis examines the impact of staged investment on the IPO underpricing of invested companies.The results show that staged investment promotes the IPO underpricing of invested companies,and the larger the number of investments,the stronger the promoting effect.The thesis than examines the moderating effects from the aspects of the investment period,the reputation of the venture capital institution,the reputation of the underwriters,and the R&D investment of the invested company.The results show that,when the investment period of the staged investment is longer,the reputation of the venture capital institution is higher,the reputation of the underwriters is higher,and the invested company’s R&D investment increases,the promotion effect of staged investment on IPO underpricing will be weaker,That is to say,they all have negative moderating effect on the main effect.The thesis further analyzes the possible intermediary effects.The results show that staged investment may promote the earnings management of the invested company,thereby exacerbating the information asymmetry between the investor and the invested company and promoting IPO underpricing.In order to ensure the robustness of the results,this thesis uses both the method of neighbor matching and caliper matching to perform PSM analysis.The results obtained by both methods are consistent with the original conclusions.At the same time,the sample is regressed by replacing the independent variables.The results obtained are still consistent with the original conclusion.Therefore,the original research conclusions are robust.Third,this thesis examines the impact of staged investment on the investment efficiency of invested companies.The results show that staged investment has significantly improved the investment efficiency of invested companies,and the promotion of investment efficiency is mainly manifested in restraining the overinvestment of invested companies,while the effect of alleviating underinvestment is relatively limited.The possible reason is that the supervision effect of staged investment is stronger than the incentive effect.Since most of the companies invested are start-ups,these companies want to improve their performance in the short term after listing,and have a stronger desire to expand the scale of assets,so they are more likely to engage in excessive investment.Based on the above analysis,this thesis uses agency cost as an intermediary variable to verify the mechanism of the staged investment’s supervision effect.It turns out that the agency cost between the managers and shareholders of the invested company is a partial intermediary that affects the investment efficiency of the invested company by staged investment.The thesis than conducts heterogeneous analysis based on the characteristics of the number of investments in stages,the investment period,and the industry attributes of the invested company.It is found that the promotion of investment efficiency and the inhibition of overinvestment by staged investment are more significant in venture capital institutions with higher reputation,longer holding period and high-tech invested firms.The thesis checks the robustness of main results through tests such as Generalized Moment Estimation(GMM),PSM method,and changing estimation measurements.Finally,the paper examines the impact of staged investment on the distribution of cash dividends.It is found that the staged investment significantly increased both the willingness and the level of payment of cash dividends of invested firms.There are two contradictory theories about cash dividend payment:"entrenchment theory" and "free cash flow" theory.The above results support the "free cash flow" theory.That is to say,currently,in China,the cash dividends distribution is more of an insufficient distribution than an over-distribution.On this basis,the thesis further conducts mechanism tests.And it is found that the number of directors assigned by venture capital plays a partial mediating effect.That is to say,the staged investment reduces the agency cost between corporate managers and shareholders and promotes the payment of cash dividends by assigning personnel to the board of directors of the invested company.Furthermore,the thesis conducts heterogeneous analysis based on the staged venture capital’s shareholding ratio,the degree of financing constraints,investment period and other characteristics.The results show that the promotion effect of staged investment on the willingness to pay cash dividends and the payment level of cash dividends is more significant in companies with higher shareholding ratios,higher financing constraints,and shorter investment periods.Than the article verifies the robustness of the conclusions through robustness tests such as instrumental variable method,PSM method,change estimation method and replacement of measurements.The innovations of this article are mainly reflected in the following aspects:First,the research perspective is novel.Stage investment is one of the risk control strategies widely adopted by venture capitalists.However,through combing the relevant literature,it is found that there are not many researches discussing the staged investment strategy of venture capital,and there are even fewer researches on the impact of staged venture capital investment on firms after listing.From the perspective of staged venture capital investment,this paper studies the impact of this investment strategy on the invested company before and after listing.This research perspective makes up for the lack of existing literature on staged venture capital research.Secondly,issues studied in the thesis are frontier issues.The research in this thesis helps to deepen the understanding and grasp of the impact of venture capital on the behavior of invested companies.For invested companies,venture capital is an external governance mechanism that not only provides funds for the company,but also participates in the company’s operation and management.Venture capital investment strategy not only affects venture capital,but also has an impact on invested companies.What are the effects of staged investment on the invested enterprises?In this paper,the research period is divided into pre-listing,in-listing and post-listing.This thesis studies the impact of staged venture capital investment on the invested company from the perspective of economic consequences during these three periods,and discusses the potential mechanism.These analyses are helpful to understand the different impacts of different venture capital investment strategies on the invested companies,as well as the mechanism of the impact of venture capital on the invested companies.Third,the research design of the thesis is reasonable.This thesis conducts research based on the path of "influence factors-economic consequences-governance mechanism",which is helpful to grasp the transmission mechanism of the effect of staged venture capital investment and enrich the research questions.This thesis takes the staged investment as the starting point,and examines the impact of staged venture capital investment on the invested company from the perspective of economic consequences during pre-listing,in-listing and post-listing these three periods.In addition,the thesis explores the mechanism of staged investment.This paper constructs the research path of "influencing factor--economic consequence--action mechanism".The research chain of this thesis is complete.