| For a long time, the fund shortage and financing difficulty of small and medium-sized enterprises have been the one of the economic focus of relevant government departments and academic circles. With the continuous development of the capital market in China, more and more small and medium-sized enterprises choose equity to conduct financing. And IPO is one of the most effective financing methods. Due to the size of small or medium-sized companies, they have relatively higher investment risk. As a result, indirect financing channels such as commercial banks have very strict financing rationing for those companies. Based on the feature of risk investment, it becomes a very important financing channel for small and medium-sized enterprises. Enterprise going public is one of the best channels to Venture capital exit. So supporting the venture capital of small or medium size companies, participate and promote IPO among companies, try to bring positive effect to the IPO of those companies is a good way. However, there have been two completely different views towards "The Effect of Venture Investment towards IPO of the Companies Invested". Through empirical researches of the biggest security markets, many foreign experts concluded that venture investment might have four effects towards the IPO of companies, namely, Screening and Monitoring, Authentication, Market Force and Adverse Selection and Grandstanding hypothesis.This paper takes the first small or medium enterprises which got listed successfully in October,2009 in Shen Zhen growth enterprises market and realized IPO by December 31th,2013 as research targets, and relative listed enterprises sample comparison and multi-variable linear return analysis as the research method, and conducted deep analysis on the market performance data on the first day of IPO, and their financial data before IPO and after IPO, thus trying to see whether those four effects from the foreign experts are applicable or not. In addition, this article also demonstrates whether the enterprises’own property or participation feature plays different role towards the IPO of the enterprises.Based on empirical analysis, this paper reached the following three conclusions: according to the empirical analysis of Effects of Venture Capital towards the Market Performance when the Company Gets Listed, the companies with venture capital share holdings performs better than the ones without venture capital share holdings in terms of higher price earning ratio, lower under-pricing rate, online issuing winning rate, and actual issue expense each share. Participating venture capital makes the authentication effect more effective, and conveys a positive signal to the investors that the enterprises are performing well in earning profits and that they have a very strong development potential. When the venture capital has a better reputation, the issuing expense each share is lower, which certified that venture capital share holdings with higher reputation improves the bargaining power with the underwriter. Venture capital enterprises with a oversea background has a lower online issuing winning rate, which demonstrates that venture capital with a oversea background is more subscribed by investors. Secondly, through the analysis of the Effects of Venture Capital towards the Business Performance before the Company Gets Listed, the growth ability of venture capital share holding enterprises is remarkably higher than the ones without venture capital share holdings, which certified that venture capital is able to screen enterprises with better potential. Thirdly, through the analysis of the Effects of Venture Capital towards the Business Performance after the Company Gets Listed, no direct relationship exists between venture capital share holding and enterprise performance. This shows that venture capital is not playing a very important role in monitoring function after the company gets listed, and the increment of value created for the enterprise is limited. |
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