Research On The Impact Of Venture Capital Financial Association On The Performance Of Invested Companies

Venture capital industry in China has been rising rapidly in recent years,which has not only made a great contribution to the growth and development of enterprises,but also has promoted the progress of science and technology innovation.Risk capital can provide financial support for enterprises.Furthermore,social connections of venture capitalists can bring added value to the invested enterprises.In times of economic transition in China,market mechanisms need to be further refined,while informal community associations can compensate for the lack of formal mechanisms for enterprises.Financial connection is a kind of social relationships connecting enterprises with financial institutions.As an important relationship and reputation mechanism,the financial connection plays an active role in the distribution of resources.Statistics show that many venture capitalists have professional experiences in banks,securities and other financial institutions.Venture capitalists' financial connections are important channels for enterprises to build relationships with financial institutions.Therefore it is important to study venture capitalists' financial connections.The current research focuses on the financial connection of companies' directors and other executives.Few scholars study financial connection of venture capitalists,and related empirical research is rather lacking.In order to study whether there exists correlativity between the venture capitalists' financial connections and the performance of invested enterprises,based on literature reviews,theoretical analysis and empirical test,this thesis makes a systematic study of the issue.This thesis eventually draws the following conclusions: Firstly,venture capitalists' financial connections promote invested enterprises' performance within a certain period.Secondly,venture capitalists' finance connections have a significant influence on the enterprises' performance of high-growth firms;no significant influence on non-high growth enterprises' performance.Third,in a certain period,venture capitalists' financial connections have greater effects on the firms which are in the low level of financial development area.The above conclusions show that the impact of venture capitalists' financial connections upon invested enterprises' performance varies due to different conditions.Enterprises should make good use of venture capitalists' financial connections to improve enterprise performance in accordance with their own conditions,and to play the multiplier effect of venture capital.