The Effect Of Private Equity Investment Research

Since the1980s, private equity funds have experienced a swift development. In recentyears, many international private equity investment funds are optimistic about China’sinvestment prospects, begin to gradually enter the Chinese private equity market, whiledomestic private equity funds are flourished in Chinese market and set off a boom ofprivate equity investments. Private equity fund as an effective financial instrument, with itsprofessional, flexible and unique advantages in the field of investment, not only meets thefinancing needs of enterprises in different development stages, but also improves capitalmarket allocation of resources and risk spreading ability. Private equity investment fundhas a great role in promoting the upgrading of the industrial structure, cultivatingmulti-hierarchy capital market, improving corporate governance structure of small andmedium or high-tech enterprises.This paper based on the research present situation of domestic and foreign privateequity investment’s effect, takes firms listed on SME board of ShenZhen Stock Exchangeand Growth Enterprises Market board in Mainland China as a valid research sample toempirically study the effects of private equity (PE) investment. We find that thecertification role, the screening and monitoring role, grandstanding of private equity do notexist significantly in China’s SME board through comparison between VC/PE(high-reputation) and non VC/PE-backed (low-reputation VC/PE-backed) firms.Finally, in view of the preamble theory and empirical study, we summarize theresearch results, combining with China’s capital market actual situation, to get somemeaningful conclusions which provide academic support for the development of privateequity and help for the growth of SMEs and GEMs in China.