Empirical Analysis Of The Private Equity Fund Effect On The Small And Medium-sized Enterprises Performance Growth

Small and medium-sized enterprises are important components of China’s national economy. However, due to the limitation of economic and financial setup, small and medium-sized enterprises still locate in the inferior positions in national economy compared with large state-owned ones. The inferior positions of small and medium-sized enterprises is mainly embodied with the ability to raise capital. On one hand, in China, the direct financing and indirect financing system themselves have to be faced with more restrictions and less resources, subsequently, the small and medium-sized enterprises with lacks in scales, business structures and backgrounds can hardly receive capital supports from the direct and indirect financing markets. On the other hand, small and medium-sized enterprises have been raising ever since the appearance of reforming and opening up policy, presenting quite a young history which is less than thirty years. With such a limited historical background, most small and medium-sized enterprises have not formed the perfect corporate governance structures, as a result, the shortages restrict the subsequent development of enterprises to a large degree.After entering the 21 st century, private equity funds have been growing sharply. As a supplement to the existing domestic financing system, private equity funds have provided large amount of fund for the development of excellent small and medium-sized enterprises, having solved the most serious development limitations faced by the small and medium-sized enterprises. At the same time, with its own resources and advanced concepts, private equity funds have also promoted China’s entrepreneurial markets by optimizing the corporate governance structure, providing financing resources, and offering operating advices and suggestions for the development of small and medium-sized enterprises. Therefore, this article focuses on the question whether the private equity funds can play a role in improving the business performances of the small and medium-sized enterprises.The chapter structure is arranged as follows:the second chapter explains the scope, frame and characteristics of private equity funds, also, this chapter includes the brief introduction of the development process of private equity funds in China. The third chapter is a theoretical analysis of the effects of private equity funds on the corporate performance. This chapter analyzes the theoretical base of the above effect mechanisms and the effects of different ways in which private equity funds participate in the corporate governance on governance structure changes. In the fourth chapter, firstly, we make a descriptive analysis of the data to roughly compare two sample groups of business performance differing on whether private equity funds hold shares of the enterprises. And then, with the short panel regression analysis, we analyze the comprehensive effects of equity fund holding shares on the corporate performance respectively. The final chapter includes a summary of this thesis and some policy suggestions.