| In the dual institutional context of China's economic transition and financial supply reform,how enterprises can better combine with financial institutions and social capital to achieve high-quality development has become an important issue.In the 2020,the State Council of the PRC and China Securities Regulatory Commission publishing the documents " the Opinions of the China Securities Regulatory Commission for Enhancing the Quality of Listed Companies " and "Increasing the Proportion of Direct Financing" express the concern of the senior management of China's capital market for China Listed Companies and they are also required to continuously explore new models and try to continuously improve their development quality and competitiveness through innovative development and optimal resource allocation.In recent years," Listed Company + PE ",as a new strategy of the company,is also a financial innovation model,the fundamental purpose of which is to reduce transaction costs and enhance enterprise value in the process of China's economic transformation.The essence of the model is to combine the strategic approach of listed companies and the expertise of private equity firms to help companies better allocate resources for investment and mergers and acquisitions,to help them expand their market scale more quickly,to improve their corporate governance,and to better promote their innovation and R?D capabilities,thereby driving China's economic development.However,since the "Listed Company + PE" model is not long in existence in China,the relevant stakeholders and regulators lack practical experience,which may lead to a series of problems,such as it is reported that many industrial buyout funds have become "zombie funds" after their establishment,not fulfilling their initial investment in innovative entities,while some industrial buyout funds have been set up as a tool for financialisation of listed companies.In addition,conflicts have arisen between listed companies and private equity institutions regarding investment targets and benefit sharing,resulting in both parties going to court.Furthermore,shareholders and investors have voted against the fund at shareholders' meetings for fear that it would harm the interests of the company.Whether the establishment of industrial buyout funds by listed companies can enhance corporate value as originally intended is a question to be tested empirically.At the same time,the " Listed Company + PE " model will induce multiple agency problems,becouse it involves the cooperation of listed companies,PE institutions and other parties.Therefore,the impact of different types of cooperation between listed companies and PE institutions on the economic consequences of fund operation is a very important issue.Therefore,this paper analyzes the factors influencing the establishment of buyout funds by "Listed Companies + PE" and the impact of the establishment of buyout funds on the long-term and short-term value of enterprises with principalagent theory,venture capital theory,social network theory and syndication investment theory.Further,the paper also examines the mechanisms associated with the establishment of industrial buyout funds to enhance corporate value,as well as the heterogeneous consequences of the choice of partners by listed companies.The main findings are that the establishment of industrial buyout funds by "Listed Companies + PE " enhances corporate value,and further mechanism studies suggest that listed companies,via cooperation in establishing industrial buyout funds,improve resource allocation efficiency,enhance corporate innovation and expand market share to improve corporate value.In addition,PE institutions play a role in social capital,corporate governance and institutional reputation.The rich social network of PE institutions can,to a certain extent,replace the internal social and political capital of the company,enhance investment efficiency through active participation in corporate decision-making,and can use their professional investment management experience to fulfill their obligations diligently.Moreover,the relational cooperation between listed companies and PE firms can increase trust,mutual understanding of each other's strategic intentions,and reduce communication costs to enhance the efficiency of fund investment.The following are the main findings of the empirical research chapter of this dissertation.The " Listed Companies + PE " aims to help listed companies develop with high quality and enhance their corporate value.The birth of this model is driven by the influence of the listed companies' own resource conditions and business strategies on the one hand,and the influence of the institutional background of the Chinese capital market on the other hand,such as the slow development of the OTC capital market;private equity institutions may have to lock in their exit channels in advance,etc.This paper focuses on the former factors.This paper finds that,in addition to financial indicators,a company's social network resources,the life cycle of the company,and the agency costs of the company have a significant impact on whether a company sets up industrial buyout funds.Specifically,compared to listed companies with abundant social capital,listed companies with little social capital are more inclined to set up industrial buyout funds,and they need to make up for their disadvantages in social capital and investment information by using PE institutions to jointly set up industrial buyout funds.Compared with low-growth listed companies,high-growth listed companies are more inclined to set up industrial buyout funds,as they rely more on industrial buyout funds to enhance their innovation and R?D capabilities and rapidly expand their market scale.Compared to listed companies with high agency costs,listed companies with low agency costs are more inclined to set up industrial buyout funds,as both management and shareholders,as well as major shareholders and minority shareholders,are more likely to agree to set up industrial buyout funds.As analysed above,the establishment of industrial buyout funds by a listed company may affect the long-term and short-term value of the company.In terms of short-term corporate value,investors will react to the company setting up an industrial buyout funds,and will respond positively if they believe that the company's setting up of an industrial M?A fund will improve the efficiency of the company's resource allocation and enhance its future performance,and negatively if not.Further,the fund characteristics,the company's own factors and the background of the private equity institution are the most intuitive factors influencing the subsequent economic consequences,so this paper examines the heterogeneous responses of market investors to the establishment of an industrial buyout funds by a company from multiple perspectives,including the size of the fund,the amount invested by the company,the type of cooperation between the private equity institution and the company,the reputation of the private equity institution,the company's dual role and the life cycle of the company.The results of the study show that market investors on the whole react positively to the establishment of industrial buyout funds by listed companies,which means companies have gained positive excess cumulative returns around the date of public announcement of the establishment of buyoutfund.Further analysis shows that there is no significant difference in the size of the fund,while the sample group with more capital invested by the company shows a more negative response,which reflects the concern of external investors that too much capital invested by the company will affect the subsequent normal operation of the company,and that the increase in the size of the capital invested will have a marginal diminishing effect.Secondly,there is a significant difference between market investors and the type of partnership between companies and private equity institutions,mainly in that investors react more positively to the cooperation between listed companies and external PE institutions with relationship than other types of cooperation,which reflects that investors believe that this type of "relationship-based" cooperation helps both parties to trust and understand each other,and can enhance the communication efficiency and decision-making efficiency.Thirdly,there are also significant differences in market investors' perceptions of the reputation of a company's partner PE firms,with the market responding more positively to highly reputable PE firms,as they indicate that they have more operational experience and market resources and are less likely to behave opportunistically.Fourthly,market investors have a more positive attitude towards the establishment of an industrial buyout funds by companies with CEO duality.The reason is that external investors perceive high uncertainty in investment and M?A decisions,and the low agency costs leads to the efficiency of corporate decision-making.Fifthly,market investors react more positively to high-growth companies setting up industrial buyout funds,as high-growth companies can use the funds to rapidly expand their market size and improve their innovation and R?D capabilities.While the market has reacted more positively to the establishment of industrial buyout funds by listed companies,which has increased the short-term value of firms,the impact on the long-term value of firms is a more important research question.This paper examines the impact of the establishment of industrial buyout funds by listed companies on the next year's value and total factor productivity.It is found that the establishment of funds significantly increases the long-term value and total factor productivity of enterprises.The study further finds that the establishment of an industrial buyout funds is more likely to increase the long-term value and total factor productivity of a firm when the firm is in the high growth stage of its life cycle;the establishment of an industrial M?A fund is more likely to increase the long-term value and total factor productivity of a private firm than a state-owned firm;and the establishment of an industrial buyoufund is more likely to increase the long-term value and total factor productivity of a firm when the firm has a higher market share.In terms of the mechanism,the industrial buyout funds can enhance the company's innovation and R?D capabilities,increase its market share and improve its resource allocation efficiency.In addition,the establishment of "Listed Companies + PE" can reduce the transaction costs associated with the Chinese institutional context,such as market fragmentation and local government intervention.This study shows that the establishment of industrial buyout funds can increase the number of cross-provincial investments and mergers by private listed companies compared to state-owned companies,and the greater the capital market segmentation,the greater the number of cross-provincial investments and mergers by private listed companies compared to state-owned companies.This suggests that private companies can use PE institutions to alleviate local resource bias and break through market segmentation.In order to investigate the micro mechanism of "Listed Companies + PE" to enhance the value of company,this paper uses project level data and focuses on the impact of different partnerships between listed companies and private equity institutions on the fund's economic consequences.The study shows that the cooperation between listed companies and external PE firms is more likely to increase the probability of fund investment in real enterprises than the internal venture capital operation of listed companies,and furthermore the cooperation between listed companies and external PE firms with "guanxi" is more likely to increase the probability of fund investment in real enterprises.This indicates that listed companies can indeed make use of the professional investment experience,rich investment resources and rich network resources of PE firms to carry out investment activities,and the mutual trust and understanding between the two parties can help enhance the efficiency of investment decisions.Further the study also found that compared with the internal operation of listed companies,the cooperation between listed companies and external PE structures is more likely to increase the probability of investment in real enterprises in the high agency cost group,which reflects the professional PE institutions can improve corporate governance;the cooperation between listed companies and external PE structures is more likely to increase the probability of investment in real enterprises in the low social network resources group,which reflects the rich social network resources of PE institutions can make up for the lack of social capital of the company;the cooperation between listed companies and external PE structures is more likely to increase the probability of investing in real enterprises in the high reputation group,which reflects that external professional PE institutions can play the role of reputation.PE institutions with high reputation can attract external investors and perform their corresponding duties diligently and conscientiously.The research of this paper has certain academic contributions and practical values,which are mainly reflected in the following aspects.Firstly,this paper conducts a systematic study on the financial innovation model of "Listed Companies + PE" setting up industrial buyout funds,making a comprehensive analysis and mechanism study on the factors for its establishment and the impact on the long-term and short-term values of enterprises.This paper also studyed the heterogeneous consequences by different type of cooperation.The studies complement the research on the "Listed Companies + PE" model.It also provides a theoretical basis and empirical data for improving the financial supplyside reform and further encouraging listed companies to improve their own quality through investment and M?A with venture capital institutions.Secondly,based on the principal-agent theory,venture capital theory,social network theory,syndication investment theory,this paper analyses the rationality of the existence of "Listed Companies + PE",and further studies the role played by private equity institutions in this process.While the previous literature mainly focuses on the change of business performance after PE participation in enterprises,this paper based on the perspective of cooperation between listed companies and private equity institutions analyzes the complementary function of the social capital of private equity institutions to the social capital of listed companies.It further studies the heterogeneity of the type of "guanxi" between listed companies and PE firms on the economic outcomes of the funds,reflecting the importance of the characteristics of their cooperation on the economic outcomes especially in the context of China's "guanxi-based".The findings of this paper enrich venture capital theory,social network theory and syndication investment theory.Thirdly,M?A activity,internal entrepreneurship and external strategic alliances are all important strategy to build up a firm's competitive advantage.However,there is a lack of cross-sectional comparisons of these strategy in the literature,while this paper uses empirical research on "Listed Companies + PE" data to show that companies using syndication investment cooperated with external private equity institutions are more likely to enhance the long-term and short-term value of companies than internal corporate venture capital.The study highlights the impact of corporate strategic innovation on the economic consequences for firms.Fourthly,in China's unique institutional context,private enterprises are naturally disadvantaged compared to state-owned enterprises,whether in terms of credit resources,administrative approval or tax incentives,local governments always favour state-owned enterprises with their resources.The findings of this paper suggest that the use of PE firms to set up industrial buyout funds can replace political capital to a certain extent,and that the social capital of professional PE firms can be used to cross the market segmentation and carry out M?A activities across provinces and cities.The findings of this study enrich the market segmentation theory and venture capital theory.Fifth,the study on "Listed Companies + PE" has practical implications for government regulators,investors and listed companies.The findings of this paper can partly help regulators to identify those "fake funds" and "zombie funds";the study also can help investors to determine which type of industrial buyout funds are more likely to enhance corporate value;finally,the study provides some theoretical basis and empirical data for listed companies to select more suitable partners to jointly establish industrial buyout funds.The research on the establishment of industrial buyout funds by "Listed Companies + PE" in this paper is of some value both in terms of theoretical development and policy practice.The joint establishment of industrial buyout funds by listed companies and professional private equity institutions can not only help start-ups to obtain financing to continue their development,but also help venture capital to achieve value-added and exit smoothly,and especially enhance the longterm and short-term value of listed companies,achieve high-quality development of listed companies and increase the confidence and vitality of the capital market.This study can help the relevant departments to better implement financial supplyside reform,activate socially precipitated capital,increase the proportion of direct financing in the market,improve the structure of the multi-level capital market,and introduce idle social capital into the real economy,as well as better help listed companies to improve their own quality and more effectively help China's economic transformation and development. |
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