A Study On The Economic Consequence Of The Damage To The Reputation Of Venture Capital

In recent years,with the sustained economic growth and the gradual improvement of related policies,the role of venture capital in China's capital market has become increasingly prominent.At present,the research literature of venture capital reputation mainly discusses the positive effect of reputation from the angles of IPO discount rate,investment behavior and long-term performance,but there are few literature on the "constraint effect" of venture capital reputation.In view of this,this paper focuses on the development of venture capital industry in China,based on the information asymmetry,signal transmission and other related theories,this paper puts forward three research issues: If an enterprise backed by a venture capital institution has committed irregularities during the listing process or within two years,and then it has been reprimanded or punished by the SEC,We can expected that the reputation of the venture capital institution will suffer,then(1)Will the reputation of venture capital institutions is damaged affect the size of their fundraising;(2)The reputation of venture capital institutions is damaged,and whether their subsequent investment activities are more difficult to make joint investments;(3)Does the reputation damage of venture capital institutions affect their chances of successful exit ?To answer the questions,this paper first reviews the domestic and foreign scholars' research on the reputation of venture capital institutions and the illegal behavior of listed companies,then makes a comment on the related literature research.Then,on the basis of the relevant theoretical analysis,we select the companies listed in the shenzhen small & middle-sized enterprise board and growth enterprise board in 2009-2012 as the research objects,and collect the data of 878 venture capital institutions from 2010 to 2015 through the CVSource database.The empirical study examines the relationship between the reputation damage of venture capital and the scale of capital raising,joint investment and successful exit,and draws the following conclusions:The illegal behavior of the venture capital enterprise has certain restraint function to the venture capital organization's raising,investment and withdrawing activity,and the economic consequence is manifested in three aspects:(1)the reputation of venture capital institutions isdamaged,and the amount of subsequent funds raised will be reduced.According to the empirical results,there is a significant negative correlation between IPO fraud and the scale of raising funds,that is,the illegal behavior of the enterprises invested by the venture capital will have a negative impact on the scale of the subsequent fund-raising of venture capital institutions;(2)The reputation damaged of venture capital institutions are more likely to opt for single-agency investments.According to the empirical results,there is a significant negative correlation between IPO fraud and joint investment,that is,the reputation of the venture capital institutions will be more difficult to obtain the cooperation of other venture capital institutions;(3)The reputation damaged of venture capital institutions have a lower probability of successful exit.According to the empirical results,there is a significant negative correlation between IPO fraud and successful exit,that is,the enterprises invested by the venture capital have illegal behavior,and the follow-up will make it more difficult for venture capital institutions to successfully exit.Based on the conclusions of the research,the thesis puts forward some relevant suggestions to the participants in the venture capital market.including venture capital institutions should spare no effort to maintain their reputation,and work to provide higher quality value-added and supervisory services for enterprises;Venture capital should be actively introduced and reputation should be considered as a key factor in choosing venture capital institutions;Market investors should pay attention to the Brand and reputation of venture capital institutions;Government departments should strengthen the audit of IPO enterprises and increase the cost of violating the regulations.,at the same time,Government departments should guide and standardize the development of venture capital industry reasonably,and promote the role of reputation.