A Study Of Private Equity Investment’s Impact On The Company’s Performance Of China

Private Equity Investment (PE), as the production of finance innovation,has played important role in international finance industry:with the benefits of professional management and financing level, it can expand the financing channel and increase the firm’s value for small medium enterprises. Meanwhile, PE also has a benefite to adjust the allocation of social resources. In previous studies, some papers only analysis the affect of private equity investment in the single or unilateral financial indicators of the performance of the company. what’s more, the previous paper were focused on the segment interval before IPO. Different from previous scholars, this paper start from the path witch the private equity participation in corporate governance and the exit way。In this paper, we select665listed companies on small and medium-sized plate, using principal component analysis and constructing a comprehensive performance evaluation model. Using that way, we compare the difference between these companies which have private equity investment or not in three years after the company IPO. Further, we using multiple regression model to analyze the company’s performance factors involved in private equity investments.On the theoretical study, this paper considers the subject of private participation in corporate governance, including the organization’s operations, the company’s operations, financial leverage, etc., can have a positive impact on corporate performance. But, the Private Equity Investment’s philosophy of profitable by exit would have a negative impact on corporate performance. In addition to the role of private screening companies, certification role and impact on the market will also have positive impact on the performance of the target company. The empirical results show:(1)With or without private equity or private equity investment company, the first year after the IPO company’s performance was significantly better than the IPO year, the second year after the IPO performance declined slightly;(2)The performance of the difference are not significant between no private equity and private equity comparison within IPO three years, but no private equity firms mean optimum performance;(3) In the long run, there are private equity investments will have a positive effect on corporate performance, while private equity holdings the proportion of private equity and other performance effects on the Company’s reputation was not significant, in addition, only a better reputation then listed private equity investors have a significant positive impact on corporate performance. At last we propose to legislate to regulate PE, set up a flexible IPO process, encourage PE to invest on strategic industry, thereby present some reflection about PE.