The Effect Of The Private Equity On The Development Of The Manufacting Enterprise

As China’s land and labor costs rise, many manufacturing companies choose toleave China to invest in countries in Southeast Asia or reflow back to developedcountries, while, at the same time the Chinese manufacturing enterprises are still facingthe pressure of completing the transformation from low value-added enterprises to highvalue-added enterprises, the government puts forward that China must change from abig manufacturing country to a powerful country of manufacturing industry. Thetransformation and the upgrade of manufacturing industry need adequate financialsupport, while banks and other traditional financial institutions, due to the limitations oftheir own conditions, there are many areas that they do not want or can not affordinvolving. In recent years, accompanied by the rapid development of our economy andsociety, foreign private equity investment institutions flock in, and the domestic privateequity investment institutions have mushroomed rapidly growing, the appearance ofprivate equity investments can fill the blank areas that bank and the public offering donot want to involve or unable to involve. Now private equity investments providesupport for many manufacturing companies that have a high potential in developmentand management in terms of funds, private equity investments home or abroad bothsuccessfully bred many industry leaders. Chose to study the impact of private equityinvestment in manufacturing companies listed on GEM (Growth Enterprises Market)development as my topic is also based on the above reasons.The main innovation of this paper is it has applied a method that combines thetheoretical and empirical aspect to study the impact of private equity investment in thedevelopment of China’s manufacturing enterprises, the topics and conception is novel;Many GEM-listed companies are those manufacturing enterprises that have high growthpotential or high-tech manufacturing enterprises, the empirical research on the impact ofprivate equity investments on GEM manufacturing enterprise development, partly isstudying its effect on the future of China’s manufacturing industry; Different from theprevious studies that focus on the underpricing aspects and results of operations ofresearch, this article will choose the first day of listing premium and long-term stockmarket performance aspects as the focus.This paper will analyze the impact of private equity investment on thedevelopment of China’s manufacturing enterprises from two aspects both theoretical and empirical. Theoretical research will analyze the characteristics of private equity and itsrelationship with private equity portfolio companies, combined with the above analysisI will analyze the beneficial effects of private equity investment brought tomanufacturing enterprises from aspects that broaden the financing channels, improvethe governance structure, entrepreneurship, promote technological innovation, promoteindustrial restructuring and upgrading, and enhance corporate performance and otheraspects of the market, and at the same time this paper will analyze the adverse effectsthat it may bring to the manufacturing enterprises, because of the factors that may exist,like, bring too much pressure, short-sighted and investment phase imbalance and manyother factors.The empirical aspect will choose252manufacturing companies listed on the gemas samples, through the contrast of the difference between the performance of privateequity investment and no private equity investment in manufacturing companies in thefirst day of listing premium and the first day of earnings performance differences, at thesame time, analyze the impact of different factors on the manufacturing of privateequity investment enterprises IPO first day price earnings ratio; Appling Fama-Frenchthree-factor model to analyze the differences between with and without the support ofprivate equity investment manufacturing enterprises institutions ’36-month long-termstock performance. In the comparison of the performance of the manufacturingcompany IPO on the first day with or without the support of the private equityinvestment, the conclusion is that private equity investment company listed on the firstday of manufacturing premium is better than non-private equity investment firm, but thedifference was not significant; Price earnings ratio side, there are private equityinvestment to support manufacturing companies, the average price-earnings ratio ishigher than the non-private equity backed companies, but the difference was notsignificant, there is a positive correlation at the10%significance level among Lock-upperiod, the reputation of private equity and private equity investment in the company’sIPO and listing on the first day a year into earnings,and the number of private equityinvestments and earnings performance was a positive correlation between,But tstatistics show no significant, private equity shareholders of the Company attributableto the proportion of board seats and earnings performance was negatively correlated, tstatistics show no significant negative; In the long-term market performance, no privateequity companies have performed better than private equity investment firm, but thedifference was not significant. And analyze the possible causes of this result. Finally, the full text summary, combined with China’s actual situation, and theexperience of other countries in the development of private equity investments, I willmake my meager proposal to regulate the development of China’s private equityindustry and build multi-level capital market, and I will also put forward my ownopinions and suggestions about China’s manufacturing industry upgrading, constructionof a manufacturing power.