Empirical Research On The Relationship Of Venture Capital Funds Holdings Investment And Enterprise Performance

Venture capital fund (hereinafter referred to as the VC, including private equity funds in the narrow sense) start late in China, but after20years of development, it has begun to take shape. Nearly10years, regardless of the number of new funds or fund-raising total in a synchronized growth trend of China’s venture capital market. As compound annual growth rate of the investment amount is up to46.2%, much higher than the traditional investment model, venture capital has become the most striking areas of today’s society economic activity. Especially after2008financial crisis, China’s VC investment and financing market increased rather than decreased gradually and became one of the main investment destinations for international venture capital.VC accumulated a wealth of experience in domestic and foreign investment, to be an essential part of the development process of financial investment and financing system in China.Microsoft, Apple, Google, Facebook, Sohu, and many other well-known enterprises have been the introduction of venture capital in the early stages of development in order to obtain financial support and other value-added services. This mode is favorable for many of today’s enterprises to be listed on the financing. Venture-capital fund holdings in companies have become a widespread phenomenon in the socio-economic development process. VC in the process of holding companies is bound to the ownership structure and the management aspects of the impact of enterprises, direct impact on business performance, growth performance and market performance. Therefore, study on the relationship between the holdings of venture capital funds and enterprise performance is necessary.Domestic and foreign scholars study serially on venture capital, starting from the VC investment process, investment role, performance and impact perspective. Studies have been mature. The VC shareholdings and enterprise performance is a hot topic in recent years, scholars use different methods to try to clarify the relationship between two of them. Most current results of that are VC can effectively improve the various indicators of performance, but the further effect of VC ownership percentage and holding time quantitative characteristics of the corporate performance has not been caught enough attention. Especially linked the VC holding time, ownership, participation in the characteristics and business operations performance, growth performance, market performance, study from a quantitative point in depth of VC shareholdings and corporate performance has a certain academic value.It is great significance for the survival and development of SMEs that Venture capital provides financial support, management and other value-added services for the early stages of development of enterprises. China’s GEM is approved by the State Council to improve multi-level capital markets of territory, and provide for SMEs the investment and financing emerging platforms. The number of VC shareholding companies listed increased significantly since GEM opened board at October2009. The2010annual report of the Chinese companies reported by Qing Research Center shows that, the number of Chinese companies listed at home and overseas supported by VC is221and have a substantial increase over the same period in2008and2009; the number of domestic market is149, accounting for73.2%and VC support enterprises in Shenzhen GEM listed companies accounted half of all. With the sustained and stable development of the GEM, and the VC has become increasingly active, and the GEM has become an important market to IPO for VC holding company. Therefore, the study on relationship between VC shareholdings and performance based on the GEM is necessary, and it has a very important practical significance to the development of China’s investment and financing market.In the backdrop of the rapid development of China’s VC market and a large number of GEM-listed supported by VC, the study chooses78companies listed in the GEM with VC shareholdings as the sample, drawing on the research results and research methods at home and abroad, and takes further empirical research on the relationship between VC shareholding and enterprise performance.The first chapter begins with describing the research background and significance of the article, and briefly describes the content and structure of this study concludes the perspective and the main innovation of this study. The second chapter reviews the definition for VC of domestic and foreign institutions, then gives the definition of this article, and briefly describes the operation and characteristics. Subsequently, this chapter summarizes the main perspective of the VC study home and abroad, and then starts from the perspective of the VC and performance, systematically reviewing the literature of domestic and foreign VC and enterprise performance. Most of Europe and the United States and other developed market research data show that:VC have a positive impact on the performance of portfolio companies, VC shareholding enterprise operations, growth and market performance, showing a better performance than the others, and the VC involved in business management performance of portfolio companies facilitating role. Sample study for Germany, Singapore, Hong Kong, as well as domestic non-listed companies shows the VC is not a significant role in promoting investment and enterprise performance, and even VC shareholdings will have a negative impact on the performance of portfolio companies. This article will choose Shenzhen GEM listed companies as a sample, to continue to study the performance of business operations, growth performance and market performance in emerging markets, domestic VC shareholdings.According to the foregoing literature review, the third chapter firstly proposed research model and research hypotheses, and then builds a conceptual model of this paper. This article assumes that the longer of VC holding time, the greater the stake and the better the company’s operating performance, growth performance and market performance; that the VC participation in corporate boards has a positive effect on enterprise operational performance, the growth performance and market performance.Through empirical analysis Chapters IV and V of the this article choose78enterprises of the VC-held GEM listed companies as our sample, and select the VC holding time, ownership, participation in characteristic three variables as explanatory variables; firm size, asset-liability ratio as a control variable. An empirical test of VC shareholdings and firm performance of business operations, growth performance, and market performance has been cast.The fourth chapter begins with the selection and definition of indicators on the study variables and descriptive statistical analysis. Descriptive statistics found that the VC holds time from4months to10years, the lowest stake less than one percent, the highest more than one-third, while73%of the VC chooses to participate in enterprise management. VC shareholding enterprises, return on assets is generally low to maintain a rapid growth in sales revenue, and the fundamentals of the issue of price-earnings ratio are better.In order to ensure the scientific and efficacy of empirical research, in Chapter Five, the correlation of the variables is analyzed and the significance of equation is tested. On this basis, further empirical analysis of VC shareholdings and firm performance variables in the regression analysis by the method of linear regression results show that:the holding time of the VC, VC ownership and corporate operational performance has a negative on the role of the VC holding time. The ownership and growth performance, market performance has a positive role. VC participation in the Board on corporate operating performance, growth performance and market performance are to promote the role, but the effect is not obvious.Through this research we get the following conclusions:VC can promote business growth rapid before listed, and get the basic recognition of the market during the listing process, but due to limitations of the small and medium enterprises in all aspects of the conditions prior to listing, the companies have to sacrifice short-term gains such as operating performance to make the GEM IPO faster and better.Chapter VI, on the basis of the study above, the findings are summarized and analyzed.In the following areas, this study made a number of explorations in order to be able to provide a reference for further study of the VC holding the investment and business performance.1.PerspectiveScholars about the relationship between VC shareholding and firm performance has formed a more systematic results, mainly concentrated in the impact of VC shareholding enterprise performance of IPO process and the performance after the IPO, the performance of the enterprise do not get enough attention before IPO. First because the data prior before listed is more difficult to obtain, second because the companies behavior did not enter the public attention. In fact, the relations and the impact of corporate and VC cooperation mainly concentrated in the enterprise before the IPO, this article will view at the enterprise performance before IPO, from a new perspective to explore the relationship between the VC shareholding and corporate performance.2. ObjectIn this paper, we will conduct the empirical research based on the data of GEM listed companies, select the VC holding companied listed in GEM from the October2010year to October2009as the research object. In the new GEM market, This article will empirical research the relationship between VC shareholdings and firm performance, and to provide reference for the development of the GEM.3. VariablesThis article proposed of innovation that VC ownership, holding time and board seats, three factors to the multi-dimensional interpretation of characteristics of VC shareholdings. And from the performance of business operations, growth performance, market performance three dimensions to measure the impact of all aspects of the business performance.And so to do further comb and explore more comprehensive the relationship between the VC shareholdings and corporate performance, wish to contribute to the systematic study of VC4. ConclusionsMost of Europe and the United States and other developed market research data shows that VC shareholdings have a positive impact on the performance of portfolio companies, and come to the conclusion based on the GEM differ. VC can promote the rapid growth of the companies before IPO, and get the basic recognition of the market during the listing process, but due to limitations of the small and medium enterprises in all aspects of the conditions before IPO, the companies have to sacrifice operating performance and other short-term gains to achieve the GEM IPO faster and better. This conclusion is conforms to China VC Development, and with the tone that GEM provide the investment and financing platform for small and medium.this conclusions has a certain practical significance and innovation.