The Role Of Venture Capital In The Cash Dividends Of Listed Companies:Evidence From China

Venture capital was first germinated in early1980s in China. After2006, with the development of multi-level capital market in China, more and more enterprises exited through the domestic capital market IPO. China has become a global venture capital centers, and almost all of the Venture Capital has a branch in China. With the rapid development of venture capital, research about venture capital has become an important field of academic research. However, few scholars discuss what influence venture capital has on some major decisions of companies after listing. Dividend policy is not only an important financial decision of listed companies, but also a hot issue in the theoretical research. The company’s dividends and retained earnings shift, and is closely related to the company’s investment and financing. The paper aims to study how venture capital affects the dividend policy of listed firms from the perspective of investment and financing demands of listed companies.Based on theoretical analysis and literature review, the paper selected A-share IPO companies from stock markets of Shanghai and Shenzhen from2006to2012as the research objects, examined whether venture capital had an impact on overinvestment and underinvestment of the listing corporation or not, further affected dividend payment through empirical method. Then the paper studied what influence characteristic factors of venture capital have on the dividend policy, Through empirical analysis the paper concluded that Venture Capital institutions still play a role of supervision after the company going public. And the company which has VC background would have a stronger positive correlation between cash dividends and free cash flow. Venture Capital institutions reduce the degree of information asymmetry, improve the external environment of financing, alleviate the cash shortage situation so as to distribute more dividends. And the company which has VC background would have a weaker correlation between cash dividends and internal cash gap. Venture Capital institutions which have different characteristics have different impact on dividend policy. Specifically, foreign capital background compared to non-foreign background could have more impact on the effect of VC institutions; state-owned background VC institutions compared to the non state-owned background could have more impact on dividend policy; The larger the scale of venture capital, the longer the venture capital period, the more the number of Venture Capital institutions, the greater the impact on the dividend policy.This paper made research combining dividend policy with venture capital by means of theoretical analysis and empirical test, which is a new exploration and attempt. The main contributions of this thesis are as follows:to enrich literature in the field of venture capital and dividend policy from cross perspective; to study the characteristics of venture capital how to influence the governance level, financing level of listed companies so as to deepen the understanding of venture capital.