Research On IPO Of Venture Capital Of High-tech Firms Based On Venture Capitalists' Reputation

Venture capital of high-tech firms, honored as a driver of economic development, will be a new outstanding industry in the world economy. Venture capital characterizes circulation, thus Venture capital exit is a key step. IPO with the most return is highly attractive in various exit channels, and therefore the research on IPO of high-tech firms in our country is highly significant in the new era.The thesis mainly studies the disinvestment decisions of veture capitalists(VC) in the course of an IPO of their high-tech firms. We consider that initial public offering underpricing and long-run market underperformance affect the IPO of Venture capital firms.We also analyze the macrocosmic and microcosmic factors causing the actual state of our IPO market, the relationships of all participants in the game of IPO, and the aim concerning VC most, all of which prove the capital market can learn of the project quality depending on VC's reputation that works on the actual state of our IPO market. We present model to study whether venture capitalists'reputation has an effect on IPO with informational asymmetry.In order to simplify the setting, we restrict the exit decision of VC to two periods as IPO process and seasoned offerings process, and analyze the pooling case and separating case. Veture capitalists with high-quality firms must choose between immediately selling their stake in the IPO market at a price below the ture value and waiting until the true value is revealed; whereas veture capitalists with low-quality firms may cheat and sell their projects at the value of high-quality firms. We show that this choice is facilitated by a reputation-based mechanism in a repeated-game setting.Veture capitalists would make effort to keep their own reputation,since the reputation is regarded as a kind of capital.The better encouraging measures act on reputation,the more attention VC will pay to it. In a further step, we provide new measures to encourage veture capitalists to attach importance to reputation,due to the actual state of our country.