Research On The Governance Effect Of Venture Capital Social Network On Listed Companies

This article applies the social network analysis method to the management decision of venture capital,mainly discusses the governance effect of venture capital on listed companies after they are embedded in social networks,and researches the multidimensional impact of venture capital network on enterprise operation and management from the perspective of network location.The venture capital social network is formed by the joint investment behavior of the venture capital shareholders,and the economic entity at the center of the network has information and resource advantages.On the one hand,the venture capital shareholders in the network can help the company develop for a long time through learning effects and social capital,and realize long-term gains from value investment.On the other hand,the resource advantages brought by the venture capital network will increase the management's blind confidence,while the channel and information advantages provide more investment opportunities,it will also lead to the short-term profit-seeking of the venture capital shareholders,thereby making behaviors that harm the development of the enterprise.So is the governance effect of venture capital social networks positive or negative? This is the main question to be discussed in this article.Most of the existing research on the effects of venture capital holdings on corporate governance focuses on the IPO stage of enterprises,and there is a lack of multi-angle and systematic research on the long-life cycle of enterprises.The research in this article focuses on the operation and management stage after venture capital becomes a shareholder of a listed company,and selects a venture capital institution that has been listed in the top ten shareholders of a listed company to build a social network for venture capital,starting from the three important indicators of listed companies' stock price quality,earnings management and innovation ability,which reflect the effectiveness of corporate governance,and by comparing the impact of venture capital holdings on the three,highlighting the uniqueness of the venture capital social network's governance effect on listed companies.The main work and findings of this article are:Firstly,in terms of the stock price quality of listed companies,the three stock price volatility indicators of GEM IPO underpricing,stock price informativeness,and stock price crash risk as explained variable,using different samples and models to examine the differences in the impact of venture capital social networks and venture capital holdings on the three,the following conclusions were reached:(1)After considering the price limit policy for the first day of IPO in 2014,the venture capital social network played a greater role in the IPO pricing stage of GEM companies,helping to significantly reduce IPO underpricing,however venture capital holdings have no significant impact on the IPO underpricing of GEM companies.(2)Venture capital social networks can significantly increase stock price informativeness of listed companies.Compared with venture capital holdings,venture capital social networks have a stronger role in promoting stock price information content.(3)Venture capital social networks can help reduce the risk of listed companies' stock price crash risk,while venture capital holdings have no significant impact on listed companies' share price collapse risk.The above conclusions indicate that the venture capital social network has a positive governance effect on the stock price quality of listed companies.This paper argues that,the venture capital network gathers the screening and authentication functions of venture capital,reduces IPO underpricing,and improves the IPO pricing efficiency;The venture capital social network amplifies the role of venture capital supervision and mitigation of information asymmetry,which is more conducive to the transparency and independence of the listed company's stock price,increasing the heterogeneity information of enterprises and improving the stock price informativeness of listed companies;The venture capital social network aggregates the risk early warning effect of venture capital on stock price fluctuations,weakening the risk of stock price collapse caused by managerial overconfidence or agency problems because of venture capital holdings.Secondly,in terms of earnings management of listed companies,after becoming a major shareholder,the venture capital institution participates in the operation and management of listed companies for a long time,which affects the quality of accounting information of listed companies.In addition to using common accrued earnings management and real earnings management,this paper also calculates the indicator of R&D investment earnings management to reveal the path of venture capital to promote corporate innovation from the perspective of earnings management.R&D investment earnings management mainly reflects the company's control of R&D expenses,and its essence is the cost management part of real earnings management.This article takes it out separately for the purpose of studying whether companies will improve real earnings management by reducing R&D investment costs.The research samples in this section are all Shanghai and Shenzhen A-share listed companies except financial companies and ST companies from 2006 to 2017,by comparing the differences in the impact of venture capital social networks and venture capital holdings on corporate earnings management,we got the following conclusions:(1)The social network relationship of venture capital has significantly improved the company's real earnings management behavior,and has no significant impact on accrued earnings management;while venture capital holdings have also aggravated the enterprises' accrued earnings management and real earnings management.(2)Venture capital social networks have no significant impact on listed companies' R&D investment earnings management,and venture capital holdings have inhibited companies' R&D investment earnings management.(3)When venture capital is divided into long-term investment and short-term investment according to the shareholding cycle,the long-term equity social network of venture capital suppresses the company's accrued earnings management,and the short-term equity social network of venture capital exacerbates real earnings management,while the long-term and shortterm holdings of venture capital both improve the company's accrued earnings management,and the short-term holdings of venture capital also exacerbate the company's real earnings management.(4)After further dividing the sample into GEM and non-GEM companies,the venture capital social network only exacerbates the real earnings management of non-GEM companies;while venture capital holdings also aggravate the accrued earnings management and real earnings management of non-GEM companies,both of which have no significant impact on the accrued earnings management and real earnings management of GEM companies.The above conclusions indicate that venture capital does not play a good supervisory role on the quality of accounting information after becoming a shareholder of a listed company.This paper argues that,venture capital holdings encourages companies to conduct more aggressive accrual and real earnings management behaviors.However,the venture capital social network can weaken the adverse impact of venture capital holdings on the quality of accounting information to a certain extent;No matter whether it is a venture capital holding or a venture capital social network,it will not carry out earnings manipulation through the reduction of R&D investment costs.This is also the way for venture capital to enhance the innovation ability of enterprises from the perspective of earnings management;When long-term holdings of venture capital form a network relationship,social networks gathered the long-term monitoring effect of venture capital,which suppresses the company's motivation for accrued earnings management.Short-term holdings of venture capital social networks exacerbate the short-sighted reputation effect of venture capital,which improves the company's real earnings management motivation;Venture capital's own characteristics and investment preferences determine that it pays more attention to GEM companies,and effectively exerts its supervision and management functions for companies with innovative capabilities and development potential,while the venture capital social network weakens the adverse impact of venture capital holdings on non-GEM companies.Thirdly,in terms of the innovation level of listed companies,this article examined the impact of the network on corporate innovation input,innovation output,and innovation efficiency from the indicators of the centrality and structural holes of venture capital social networks,selecting all A-share listed companies in the Shanghai and Shenzhen stock exchanges except the financial industry and ST companies from 2006 to 2017 as empirical research objects,and draws the following conclusions:(1)No matter from the perspective of centrality or structural hole,the venture capital social network has significantly improved the innovation level of listed companies,which is specifically reflected in the increase of enterprise innovation investment,the increase in the number of invention patent applications,and the improvement of the efficiency of invention patent innovation;Compared with the increase of venture capital holdings to the innovation level of enterprises,the social network of venture capital has a stronger promotion effect.This is because the network gathers the functions of "attracting capital" and "inducing wisdom" of venture capital.(2)There is an alternative effect between the venture capital social network centrality and structural holes.Although the venture capital social network centrality and structural holes have improved the innovation ability of enterprises,it does not mean that companies with both advantages have stronger innovation capabilities.(3)By comparing the impact of venture capital social network centrality and structural holes on the level of corporate innovation,we find that the impact of the centrality of venture capital networks on corporate innovation is better than the impact of structural holes.Therefore,the enterprises in the central position have the incentive to reduce the structural holes to retain the advantages of centrality.(4)Compared with non-GEM enterprises,the venture capital institutions' network relationship have a more significant role in promoting the innovation level of GEM enterprises.From the perspective of innovation,venture capital institutions still prefer GEM companies,and the venture capital social network amplifies the value-added advantage of venture capital among GEM companies.Based on the above empirical research conclusions,this article innovatively proposes the agglomeration effect and the "concave-convex mirror" effect.The aggregation effect is manifested in the venture capital network that brings together professional venture capital shareholders,collects high-quality social resources,and gathers the governance effects of venture capital.The "concave-convex mirror" effect is that the venture capital network like a convex lens magnifies the positive effects of the certification,supervision and value-added of venture capital shareholders: listed companies located at the center of the network have lower IPO underpricing,higher stock price information content,lower stock price crash risk and higher Innovation level.The venture capital network like a concave lens narrows the negative effects of shortterm and name-by-name of venture capital shareholders: restrain the motivation for accrued earnings management of venture capital holdings and weaken the adverse impact of venture capital holdings on the quality of accounting information.Therefore,this article not only enriches the relevant literature on the application of social network analysis in the field of venture capital,but also provides a basis for the company management to attract high-quality venture capital shareholders and actively embed in social networks,and provides ideas for improving the internal governance efficiency of listed companies.So it has certain theoretical and practical significance.