Study On The Quick-flip And Market-timing Of VCs' Share Selling

Venture Capital(VC)is an important capital source for startups,besides they provide value-added services in corporate governance.Withdrawal is one of the most important decisions of VC.IPO is the optimal pattern which lead to high yield and good reputation.The launch of SME board in 2004 and GEM board in 2009 provided conditions for VCs to exit through the stock market.The research is based on the events that VCs destocking in SME board and GEM board during 2004 to 2016,focused on the destocking speed and market timing.This paper research the "quick flip" and "market timing" behavior of VC in investment withdrawal.The research finds that:(1)There is "quick flip" behavior of VCs.VCs tend to destock after releasing;VCs with less experience,non-state equity background and low involvement of portfolio have faster reduction speed.(2)There is "market timing"behavior of VCs.VCs minus shares can earn advance excess return or avoid excess loss.VCs with more experience,foreign equity background and lower involvement of portfolio have stronger market timing.The results show the main factors that affect"quick flip" are the profit,reputation and the low involvement of the portfolios;Profit,profession and high involvement of the portfolios are the main factors that affect"market timing".This paper contributes to prior literature in the following aspects:(1)providing direct evidence of the specific behavior of VC from the stock market(2)focusing on VC stock market in the aspect of stock reduction(3)testing the excess return after the destocking to determine if venture capital is always good for the company.