The Impact Of Venture Capital On The Financing And Investing Behavior Of China’s A-share Listed Companies

Venture capital started in 1980s in China, the scale and the number of which has obtained a rapid growth after nearly thirty years of development.With the rapid development of the venture capital industry, its impact on the company’s technological innovation and corporate governance has become increasingly prominent. As the existence of lock-up period in our country, venture capital will not exit immediately after the successful listing, but will continue to affect all aspects of corporate governance of the listed corporation. At present, China’s listed corporations generally have some problems in financing and investment, mainly for the narrow financing channels, the difficulty in exogenous financing, and the obvious equity financing preference. Some companies even fabricate false information in order to achieve IPO, allotment, and additional objectives. Besides, the excessive dependence on equity financing has brought a series of negative effects on the company’s business and development; In terms of investment, the non-efficiency investment is prevalent in listed corporations, namely the existence of over investment or under investment, and there is a close relation between the non-efficiency investment and free cash flow of the company. Non-efficiency investment seriously affected the development of enterprises, even leading some enterprises into financial crisis.Aiming at these problems, this paper emphatically discusses whether the participation of venture capital will affect the investment and financing behavior of the listed corporations. Based on the relevant literature, this paper collects the data of China’s A-share listed corporations during 2006-2013 as the samples of the empirical testing. Results find that the participation of venture capital can effectively increase the debt financing and equity financing of the listed corporations, and can significantly relieve the over investment of listed corporations due to excessive free cash flows, but for under investment, the effect is not obvious. In addition, this paper also finds that the effect of venture capital to improve the efficiency of investment of listed corporations is mainly observed in the main board market.