The Impact Of Venture Capital On The Financial Performance Of GEM Enterprises Research

Most of the GEM enterprises with development potential are in the initial stage of establishment and are weak in terms of development level and financial strength,making it difficult to obtain external financing.As venture capitalists pursue high-yield and high-risk projects,they can provide capital,talent and technology to help companies develop their services,thereby enhancing the financial performance and market value of the investee company.Risk and reward go hand in hand,and the highest returns are usually accompanied by high risk.Most of the low-risk investments made in the past have not resulted in significant profit returns,and the success rate of all venture capital investments is around 10%.In the context of the worldwide economic rebound,the scientific and standardised approach to economic development in China and the general trend of industrial reform,there is an urgent need for GEM companies to explore a new economic development model,and venture capital institutions are actively involved in the companies,playing an important role in helping economic development.Therefore,in the current economic development situation,it is of great theoretical research importance and practical significance to explore the impact of venture capital on the financial performance of Chinese GEM enterprises.This paper adopts the PSM approach to study the impact of venture capital on the financial performance of GEM enterprises,to achieve a more accurate judgment of the effect of the value of venture capital,and also to provide a theoretical basis and research basis for enterprises’ decision on whether to introduce venture.In terms of research content,this paper refers to the hypothesis models of relevant studies by previous scholars,and selects and studies the effects of three types of venture capital investment,VC,UNITE and FAME,on the financial performance of enterprises;in terms of sample data selection,this paper selects a time span of 2014 to 2019,all enterprises listed on GEM as a sample,spanning six years,collecting a total of 455 companies,excluding all six After excluding all six ST shares,449 companies were retained.However,considering that some of the venture capital investment will be withdrawn within three years of the listing,only data related to the year of listing and two years after the listing were selected for449 companies,and since the data for the fourth quarter of 2021 was not released,quarterly statistics for the year of listing and the following year were retained for new companies listed in 2019,resulting in a total of 4,944 samples;in terms of research methodology,this paper adopts the propensity score matching method,which can avoid the controversy that the improvement of financial performance of GEM companies is not caused by the introduction of venture capital but the inherent development factors;after completing the results of PSM analysis,linear regression is then used as a robustness test to verify the accuracy of the paper’s conclusions and improve the credibility of the empirical results.The main findings of this paper are that the introduction of venture capital institutions,the introduction of joint venture capital,and the introduction of highly reputable venture capital,all three categories of venture capital participation,have a positive impact on the development of financial performance of Chinese GEM companies.Based on the research findings,this paper proposes matching countermeasures.The content of this paper is useful in providing indicative recommendations for GEM enterprises to select different types of venture capital institutions to improve their overall financial performance.