Study On The Effectiveness Of VC Of The Small And Medium-sized Enterprises Board's IPO

The small and medium-sized enterprises (SMEs) are becoming new economicgrowth and innovation strength of China,However, a lot of SMEs are facingfinancing difficulties. In recent years,SME and Capital Market are effectivelyconnected by venture capital. The role of venture capital on IPO have attracted wideattention in academic circles.The academic study about the venture capital role in the process of IPO, there aretwo theories: 1. Certification/Monitoring theory suggests that venture capital cancertificate whether the company have development potential, control the companyIPO underpricing, and monitor the development of the company; 2. Adverse Selection/Grandstanding theory is that the best companies often choose to self-finance, generalcompanies will choose venture capital. In order to pursue fame, the new venturecapital institution will make immature enterprises into IPO market. In this paper, wewill do empirical test with the actual situation.In this study, we choose 531 companies from the SME board in Shenzhen StockExchange listed as the research object, the sample companies are divided into twogroups according to whether have venture-backed for studies. Event Researchmethods, comparative analysis, parametric tests, nonparametric tests and otherstatistical methods are used to compare the operating performance of samplecompanies during Before-IPO operating results, IPO first-day market performance,After-IPO operating results. In order to verify the venture capital Certification/Monitoring and Adverse Selection / Grandstanding model in the applicability ofChina's capital market, while reflecting the operation of the effectiveness of theventure capital industry.We find the effects of venture capital firms support the AdverseSelection/Grandstanding and Monitoring models. The Certification model does notwork in China SME Board. In the end, we made corresponding suggestions topromote the Venture Capital development.