The Empirical Research On The Impact Of Venture Capital On Listed Companies’ Non-efficient Investment Of SME Board

With the successful establishing of SME listing platform and GEM (Growth Enterprise Market) in2004and2009, respectively, Capital market in China brings remarkable opportunities for VC (venture capital) business, which functions as the incubator for innovative high-tech enterprises. Venture capital invests enterprises, bringing in the cash flow but also interfere the administration and management.In fact, beside bankroll (or funding), VC takes part as of being running through all places, such as HR advising, products researching, marketing strategy setting and of course the financial management.The Venture Capital market is composed with investors (suppliers of funds), venture capital institutions (operators of funds) of capital and entrepreneurs. They are linked through contract. Investors provide funds to venture capitalists, and then Venture Capital make use of their professional background to choose entrepreneurial enterprises who need the funds. After the operation and management of the venture capital institutions, capital appreciation flows back to the capital investors, the last venture capitalists will get the income allocated to investors, and thus the cycle of circulating capital.In addition, the operation mechanism of venture capital play a role in corporate governance, many studies shown that the venture capital can supervise the listed company. At the point of agency costs theory, Therefore, venture capital can not only play the oversight function to reduce the agency problem and over-investment, but also play as a third-party certification effect, which would reduce the risk of corporate and investor on information asymmetry. venture capital can use it’s social resources to attract more funds, so as to alleviate the insufficient investmentFrom existing researches, we can find that the majority of researches are study the relationship between venture capital and corporate performance, venture capital and earnings management, venture capital and IPO underpricing, and the minority studies are empirical analysis on the impact of venture capital on non-efficient investment(over-investment and under-investment). Based on the above ideas, In order to confirm the influence of venture capital on over-investment and under-investment, this essay is divided into six parts:The first part is the introduction of the article. First introduce the source of the topics, reveal the purpose of this paper.Then point out the significance based on the present situation of non-efficiency investment in china. After that, given the framework of the articles, we also introduce research methods we use and the innovation of this research.The second part is the review of the Literature. The article first reviews the literature of the relationship between domestic and foreign literature on Venture Capital and non-efficiency investment. Then reviews the literature of the relationship between the Venture Capital and non-efficient investment.In the third part is theoretical analysis. This part is about how venture capital plays a governance role in non-efficiency investment. The paper is mainly from the perspective of internal corporate governance angle and external financing environment to introduce venture capital in the corporate governance mechanisms.The fourth and fifth part is the empirical research between venture capital and investment non-efficiency. Firstly, this chapter defines the methods of calculating the contribution of various stakeholders and their weights. Secondly, establish multiple linear regression model. Thirdly, conducts empirical analysis to test hypothesis.The last part is the conclusions of research and policy recommendations.Contribution of this paper is expected as follows:Firstly, the research is from a new perspective to research how venture capital affects investment non-efficiency.Secondly, the model is selected from Richardson (2006) investment model that measure the extent of non-efficiency investments, and the growth rate of sales is used as an alternative growth opportunities variable in this paper.Finally, the venture capital background divided into government background, private background, foreign background and mixed background, We confirmed that the different backgrounds have different results.