Study On The Effect Of Venture Capital To Financial Governance Efficiency On Gem Listed Companies

Venture capital was originated in the United States, the history of which in China can be traced back to the 1980’s, and its main investment target is innovative SMEs which are characterized by high risk and high return. In 2009, the listing of GEM provided a broader market for the development of venture capital, and brought the gospel for innovative SMEs. Venture capital provides not only to the necessary funds for SMEs, but also their management experience, human capital and social resources. Thus, the study of venture capital for SMEs will help improve the management level, and promote the rapid development of GEM listed companies.Based on the summary and analysis of the current studies, this paper was found that some scholars emphasized much on the study of venture capital companies listed on the GEM but overlooked the study of venture capital financial governance after the listing.By normative and empirical analysis methods, the main contents are as follows: the concept and characteristics of venture capital, the motivation of participating financial management in venture companies, and objectives of the venture capital financial governance, the theoretical basis of financial governance efficiency, etc. Based on this, some GEMs, which were listed through IPO from 2009 to 2013 and had got venture capital support before listing, are chosen as research objects. In this thesis, financial governance efficiency is mainly measured by two aspects: financial governance income and financial governance cost, and the four main characteristics of venture capital: joint investment, the proportion of venture capital holdings, the length of venture capital holdings, and seats of venture capital occupied are used, to study the effect of venture capital on financial governance efficiency of companies listed on GEM. The empirical results show that: the participation of venture capital significantly improves companies’ financial governance efficiency. The proportion of venture capital holdings, the length of venture capital holdings and seats of venture capital occupied all bring positive influence on financial governance benefits and negative influence on financial governance costs, which indicates that the higher proportion venture capital holdings, the more time of participation, the more seats on the board of directors executive board of supervisors, mean the higher efficiency of financial governance. In addition, the author found that joint investment and financial governance income have a negative correlation, which may result from lacking a good working relationship among venture institutions and the risk of free-riding suspects. Therefore, cooperation among venture capital institutions must be strengthened; meanwhile system perfection and adjustment of their own governance structures are necessary.