The Effect Of Venture Capital And Business Angel On The IPO Short-term Excess Returns Of GEM Board

In recent years, China’s venture capital industry increase obviously which is in a period of rapid development. The financing and investment scale of venture capital are expanding. Venture capital can not only bring money for the enterprise, but also use their own management experience and network resources to help enterprises rapid growth and success, so as to realize the contribution to innovation, employment, economic growth and industry innovation. As an important force to promote the development of high-tech industry, angel investment is increasingly concerned by the community, not only to provide start-up capital for start-ups, but also bring a wealth of management experience. Committed to supporting high-tech industry, the introduction of the gem for SMEs to provide financing channels, but also for venture investment and angel investment to provide a way out. However, in the mature and immature market, different periods, different locations, new shares are generally exist IPO underpricing phenomenon.This text will study IPO short-term excess returns based on venture-backed and angel-backed. The object of study is Shenzhen GEM 355 IPO companies from time October 30,2009 to November 30,2012. The research methods include descriptive statistics, the mean difference between test and stepwise regression analysis and so on. The results showed that venture capital can effectively reduce the IPO short-term excess returns which play a "certification" and "supervision". And venture capital holds the higher proportion of ownership, the restraint of enterprise IPO short-term excess returns more obvious. But the number of venture capital institutions is no significant relationship with the IPO short-term excess rate. Angel investment participation is not significantly reduce corporate IPO short-term excess returns. On the contrary, angel investment support enterprise IPO short-term excess rate of return was significantly higher than that of no angel investment support enterprises in Chinese gem market. Angel investment can’t play the role of reducing information asymmetry which avoiding adverse selection and screening of supervision.