Venture Impact On Corporate Financial Distress

In recent years, Venture Capital by way of equity investment participates in theproduction and operation of enterprises, and get in high equity investment income. Atthe same time the value of the invested enterprises grows. Locked by the equityrestriction, continue to gain ownership of sustainable and other reasons, after IPO VCwill not quickly withdraw. Whether the VC in this period will continue to play itsfunctions so that enterprises continue to add value get the attention of theorists. Thispaper discusses the role of VC play after IPO in the perspective of financial distress.This article defined the scope of Venture Capital, financial distress meaning,examined the distress company and their mate company from2004to2012on SMEand GEM, got733observations, depended on the research to select different samplesand used logistic regression, multiple regression to exam VC’s function, found thatthe VC’s function of supervisory and value-added services after IPO is still significant,as follows: VC can reduce listed companies’ probability of financial distress; if thelisted companies had been in financial trouble VC can reduce the costs of financialdistress, but there is no significant relationship between financial distress costs ofmetering values and VC. Further research also found that: high reputational VC canbetter reduce the probability of financial distress; VC’s float and the probability offinancial have a negatively relationship; joint VC can better reduce the financialdistress of listed companies the probability; relationship between the probability ofstate-owned venture capital firms and listed companies in financial difficulty was notsignificant.