The Effect Of Venture Capital In Corporate Governance

With the continuous development of China capital market,venture capital,as a new financing method with multiple advantages,is gradually recognized by people.With its strong industrial strength,rich management experience and extensive resource network,it can help enterprises to provide value-added services,thus affecting corporate governance.At the same time,the contradiction between the venture capital and the invested enterprise is endless.Therefore,it is of great significance to understand the corporate governance effect of venture capital,to deepen the understanding and prevention of venture capital,and to reasonably introduce venture capital.This paper reviews the relevant literature and theories of the corporate governance effect of venture capital,and takes Topstar as the research object.This paper analyzes the influence of Topstar's introduction of venture capital on the two kinds of agency problems of corporate governance in the aspects of governance structure,organizational form and post investment effect,evaluates the corporate governance effect of venture capital through financial performance and corporate governance evaluation index,and finally puts forward relevant countermeasures and suggestions for the rational introduction of venture capital and the development of venture capital industry.This paper finds that in general,venture capital improves the corporate governance level of Topstar.First,the entry of venture capital helps to alleviate the first kind of agency problem in corporate governance.Venture capital supervises,motivates and restrains the enterprises by signing a gambling agreement with the enterprises,participating in the board of supervisors and special committees of the company,assisting the enterprises to formulate equity incentive plans,etc.,so as to make the objectives of the enterprise management and shareholders tend to be the same,jointly seek the long-term and healthy development of the enterprises,reduce the agency costs,and improve the first type of agency problems.Second,the entry of venture capital helps to alleviate the second kind of agency problem in corporate governance.Venture capital adopts the form of equity investment,optimizes the equity structure of Topstar in terms of equity concentration and equity check and balance,and expands the scale of the board of directors and effectively adjusts the membership structure through the Governance Way of entering the board of directors of Topstar,which has a positive impact on improving the operation mechanism of the board of directors and the independence of the board of directors.Finally,venture capital aims to assist enterprises to go public Promoting the standardization of corporate governance plays a positive role in protecting the rights and interests of small and medium-sized shareholders,and improves the second type of agency problem.Third,the value-added services provided by venture capital help enterprises to successfully complete IPO and improve the level of corporate governance.Finally,this paper compares the financial situation of enterprises after the introduction of venture capital with the industry average value,and through the calculation of the corporate governance evaluation index of Topstar before and after the introduction of venture capital for comprehensive evaluation,and then finds that corporate governance has greatly improved,and the improvement effect is obvious.Based on the above analysis,this paper comes to the following conclusion: the introduction of venture capital will effectively improve the two types of agency problems in corporate governance and reduce agency costs.In addition,it can help enterprises successfully complete IPO and accelerate the process of improving corporate governance.Therefore,combined with the conclusion of this paper,some suggestions are put forward.First,we should introduce venture capital with advantageous resources in time;second,we should sign contracts with venture capital to strengthen the communication mechanism;third,we should pay attention to the allocation of venture capital;fourth,we should be alert to the dilution of equity to protect equity control.This paper hopes to provide some references for the development of venture capital industry in China and the introduction of venture capital for enterprises,so as to fully understand the role of venture capital and seek benefits and avoid disadvantages.