Institutional Environments, Venture Capital And Debt Financing Of Enterprises

Recently, the venture capital institutes which invest in high start-up companies bring new energy to domestic markets. They not only provide capitals, but also manage the companies. Thus, the roles of venture capitals attract lots of scholars. However, the existing research has focused on the roles of venture capital before IPO, ignoring the impact on companies after IPO especially the impact on the subsequent financing capacity. With the purpose of optimization of the theory of the role of venture capital and removal of financial distress for enterprises simultaneously, this paper is devoted to research the role of venture capital on listed companies in subsequent debt financing capacity and whether the institutions will influence the relationship.This paper holds the view that the involvement of venture capital will observably enhance enterprise’s capacity of debt financing. For one thing, the venture capital institutes choose start-up companies with good potential and reduce the information asymmetry. These choosing and certification processes can transmit positive signals to market, which attracts creditors and investors; for the other thing, after participation the venture capital institutes are engaged in the management, supervise enterprise, perfect the governance structure, and promote performance, which make the creditors and investors be willing to provide capitals. In order to study the above-mentioned relationship deeply, this paper gradually analyses and tests the following three questions:first, compared to non-venture capital backed companies, whether the venture capital backed companies’financing capacity is stronger; second, whether the heterogeneity of venture capital including shareholding and reputation will influence the capacity; finally, this paper test whether this relationship changes when taking institutions into considerations.This paper chooses the enterprises which are listed on the Shenzhen Small and Medium-sized Board and Growth Enterprises Market during 2007-2012 as samples. In these companies, there are 307 companies backed by venture capital and 634 not backed by venture capital. We use these enterprises to establish regression models to carry out an intensive empirical study for the effects, and the number of debt issue as the dependent variables. The results demonstrate that:(1) firstly, the venture capital has an effect on corporate debt financing capacity; (2) the heterogeneity of venture capital will make company financing capacity change. That is, the heterogeneity of venture capital make the effects on debt financing capacity different; (3) It is worth mentioning that when institutions change, the effect of venture capital on corporate financing capacity will not be the same. That is to say, institutions will influence the relationship between venture capital and company debt financing capacity.