| The rapid development of China’s market economy calls for the reforms of the financial system. As well as, fostering strategic industries and enhancing the innovation capability are upgraded as the national strategy, which also requires the establishment of the financial system to guide the flow of social funds, and venture capital has become the important part of the financial system. In response to building a multi-level capital market, as well as providing a good exit channels for venture capital, the first batch of28companies successfully landed on the Shenzhen Stock Exchange October30,2009,which means the GEM was launched. Differnt from the Main Board Market and the Small and Medium-sized Enterprises Market,the GEM exists a large number of venture capital. GEM has being running for three years,how the performance of IPOs in GEM change, whether the venture capital is the reason of performance changing, does veture capital play a positive role or a negative role during the changes of the performance are the study focus of this paper.The existing studies on the mature capital markets in North America indicate that the venture capital has the function of certification, supervision and provision of value-added services, besides, has a positive impact on the R&D capabilities of the IPOs. Therefore, IPOs with venture-backed do less earnings management before IPO and the performance will also be improved after IPO. However, the researches on emerging capital markets abroad have drawn the opposite conclusion that the company with venturn capital’s performance will be worse after the IPO. On the other hand, the research of China’s capital market has not reached a unified result, even very different conclusions. Therefore, it is more important to study the effect of venture capital to the GRM market. On this basis, the author proposes the null hypothesis and the alternative hypothesis.This text selects eight representative financial indicators and establishs a comprehensive financial indicators system included profitability, solvency, growth and development capabilities. By working out each indicator’s median and mean of PO-2,IPO-1,IPO+0.IPO+1,we do the described statistics of performance changes of IPOs on GEM.After proved the existence of the PO effect in GEM,we attempted to study the differences of performance changes which are impacted by the IPOs with venture capital and IPOs without venture capital. Through a comparative analysis, we draw a conclusion that the venture-backed companies tend to do more earnings management before the IPO and show the worse profitability and growth and development capabilities,which is compared with the EPOs without venture capital.China’s venture capital does not focus on how to support the IPOs to improve management and how to accelerate the upgrading of products, but will focus more on decorating the performance to raise the stock price in convenient to get more from the secondary market. Then we built a cross-sectional regression model to prove that whether the venture capital is the impact of changes in the performance of IPOs.At last,author put forward policy recommendations from two aspects.This paper contribute the following two innovations:First, the author constructed a scientific and comprehensive financial indicators system, no longer only departure from the profit targets. Besides, the author introduced the operating cost ratio as the supplementary indicators so that we can achieve the real reason for the changes of performance, In addition, the author draw a conclusion that venture capital does not bring the improvement in performance, but aggravate the deterioration of the performance, which does not comply with foreign scholars’ theories, but it seems more in accordance with China’s current situation.This is the largest innovation and contribution of this article.But, the article also has defects such as the small sample size, ignorance of earnings management and other factors. |
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