VC/PE's Value-Added Effect And IPO Impact

With the development of Chinext Stock Market, VC/PE has played a more and more important role in Chinese capital market. The most dominant theories in foreign countries related with these topics insist that VC/PE do provided value-added service to its invested companies. There're been generated 2 main kinds of theories conferring to the underpricing level of VC/PE backed companies compared to Non-VC/PE backed ones. The certificate/monitor model suggests that VC/PE could eliminate the information asymmetry during the IPO process so that its underpricing level would be lower. The grandstanding model insists that the underpricing level of VC/PE backed companies is higher as the reason that some VC/PEs, especially the immature, would like to push companies go to public as early as possible in order to build its reputation and gain more capital for further venture capital fund.Based on the total samples of 209 companies listed on Chinext Stock Market and its VC/PE shareholders, this paper examined the relationship between VC/PE and its invested company's performances on profit, growth and High-tech through empirical analysis. Moreover, we examine the relationship between VC/PE and IPO under-pricing issue. Finally, we exam that do VC/PE still have effect on the companies even after IPO.Study shows that:(1) there is a significant correlation between VC/PE ownership and the profit ability of invested company, but not high growth and high-tech. (2) the underpricing level of VC/PE backed companies would be lower than Non-VC/PE ones. (3) All companies perform worse in financial aspects after IPO, however the reduction scale of VC/PE backed companies could be smaller than Non-VC/PE ones. We could get the conclusion that although VC/PE has played part role as same as certification/monitor model, Most of VC/PE's investment behavior mainly aims to get high payment after IPO and do not provide much value-added services to improve the invested company's corporate governance.