A Study On The Effect Of Private Equity On The Value Of Companies Listed On GEM

As an emerging power of capital markets, Private Equity has gradually developed into another important financing channel other than bank loans and IPO in developed countries. In China, Private Equity first appeared in 2004, and there are only 10 years up to now, but Private Equity has made rapid development. Especially the found of GEM provides an efficient exit mechanism for Private Equity. At the same time, Private Equity not only injects money for companies listed on GEM, but also participates in enterprise management actively, and it plays a more and more important role in GEM’s development process, and it may have some impact on the value of companies listed on GEM.This thesis first forms research ideas by sorting and summarizing the relevant research of domestic and foreign scholars, and extract the topic to be discussed based on relevant theory and literature. Then on the basis of theoretical analysis, this article does an empirical analysis to obtain empirical support. Taking into account the intrinsic linkages and mechanisms between Private Equity, corporate governance and firm value, this thesis combines these three aspects in the theoretical and empirical research to probe the effect of Private Equity on firm value. This thesis uses IPO companies on GEM in 2009-2012 as samples to research the thesis of "Private Equity affect the value of listed companies on GEM" in three aspects of Private Equity dummy variables, the proportion of private equity holdings and joint investment dummy variables based on the view of corporate governance. Corporate governance mainly expands from three aspects including the ownership structure, the board of directors and management incentives, and we use the ownership concentration degree to measure the ownership structure, whether the chairman of the board is general manager to measure the board of directors, the proportion of senior management shares to measure management incentives. By using descriptive statistical analysis and multiple regression analysis, this thesis analyzes overall data, sets up models, tests and verifies the proposed research hypotheses. This thesis obtains the research conclusions: Private Equity has a significant and positive impact on firm value, and the participation of Private Equity can enhance the effect of characteristic variables of ownership structure, the board of directors and management incentive on firm value. The proportion of Private Equity holdings and joint investment have a positive impact on firm value, but the effect was not significant. In addition, the higher of the proportion of Private Equity holdings, the positive effect of characteristic variables of ownership structure on firm value is stronger, but the increase of the proportion of Private Equity holdings can’t significantly strengthen the effect of characteristic variables of the board of directors and management incentive on firm value. Compared to a single investment, joint investment can’t strengthen the effect of characteristic variables of ownership structure, the board of directors and management incentive on firm value. Finally, this thesis makes recommendations according to conclusions in order to promote the healthy development of Private Equity, make it play its active role fully, and promote companies on GEM to improve their firm value.This article is divided into five chapters: the first chapter is an introduction. It first introduces the research background and significance of Private Equity, then analyzes and reviews the contents of the literature at home and abroad, and points out innovation points and deficiencies of this paper finally. The second chapter is a summary of Private Equity and GEM. This chapter briefly introduces the concept, characteristics, current development situation of Private Equity, and describes the establishment of GEM markets and the value of companies listed on GEM. The third chapter is theoretical analysis of Private Equity affecting the firm value and research hypothesis. Based on the view of corporate governance, this thesis analyzes the theory of Private Equity affecting the firm value, and puts forward research hypotheses on this basis. The fourth chapter is empirical analysis of Private Equity affecting the value of companies listed on GEM. This chapter selects companies listed on GEM as samples, uses metrological methods to analyze the thesis. The fifth chapter is conclusions and recommendations. This part obtains conclusions according to the empirical results, and it tries to make recommendations combines with conclusions and reality of our country.