The Effects Of The Private Equity On Corporation

Since the reform and opening up, China’s economic development has made remarkable achievements, economic growth has always maintained the momentum of high-speed stability, SMEs established in the motherland everywhere reach more than42million as of2011, China’s SMEs, accounting for enterprises99.4%of the total, which has made an indelible contribution to a lot of employment in our country and the development of China’s economy. However, when we see the achievements we should also face up to the problems currently facing China’s economic growth. One important issue is that the financial market development is lagging behind and relatively simple way of corporate finance, enterprise is to rely on indirect financing, direct financing smaller, to some extent, severely restricted the continuous development of enterprises, especially small and medium-sized in the growth process the development of enterprises. In recent years as a financing channels for private equity investment has been rapid development which has brought a ray of hope to solve the problem of financing of SMEs, the one hand, the private equity investment for the enterprise replenishment, and because it is through the equity in the form of to financing enterprises, do not need consider the problems when are due for repayment mitigate liabilities pressure; the other hand, private equity investments generally provide value-added services to be interested in the operation and management of enterprises, more standardized management system, and not to control the enterprise as the target, making the entrepreneur won’t worry about the problem of dispersed ownership. However, we should also know that the purpose of private equity investments by way of equity investment enterprises is to make money, it is based on "Investment-Operations-Exit profit- reinvestment" continuous cycle. From which we can see the exit profitable plays a vital role in the entire process, different exit relates to the size of the investors in investment income, this time as a high return on the IPO exit on to become the first choice of private equity investments.Established for the purpose of China’s small board and GEM for better growth of SMEs financing, in recent years, a small board and GEM played an important role in the growth process of SMEs, which is also a private equity investment the IPO exit the workplace, especially the establishment of the GEM market make private equity investment have a better quit platform. Much attention GEM listed companies, more than half of the companies are private equity holdings, private equity investment plays an important role in the development process of the GEM companies. Affect the company’s study of China’s capital market for private equity investment, domestic scholars are also more extensive literature study, however, most of papers are for the Shenzhen SME Board. In view of the above these differences, we need to focus on private equity investment effecting GEM companies, however, a comprehensive study of the private equity investment about operating results of the company prior to the IPO of the GEM, underpricing in the IPO process and other market factors, and post-IPO performance and results of operations have not yet had.In this paper, the independent sample test,paired sample test method and the use of measurement regression analysis method to fully verify the impact of private equity investment GEM companies from which to judge the role played by the private equity investment. We use standard samples matching which is to learn Megginson and Weiss(1991) used the two standards of the industry and asset size, industry reference sub-categories of the classification criteria of the SFC, the asset size prior to the listing of the company’s total assets, followed by the use of measurement regression verify the impact of the results of operations of the Company and the Company IPO suppressionprice rate factors.Innovation of this paper is one of a select company of Shenzhen GEM sample selection, scholars at home and abroad to study the impact of private equity investors to GEM companies is a little, this paper use larger sample than the past, which ended June30,2011the full sample data to study the problem. From prior to the listing of the company, the three aspects of the listing date and listing more comprehensive study of the impact of private equity investors GEM companies, and multi-faceted analysis of the factors that impact on the operating results of the Company and the IPO underpricing rate in order to better investigate the role played by private equity investors. Third, a literature study of private equity investors to the method used in the process of corporate influence independent samples comparison, the study results may be affected by the different nature of the interference, this paper is two sample paired comparisons and independent samples analysis method to verify the hypothesis of this paper to prove more persuasive.