A Study On The Influence Of Private Equity On Public Company

With the development of the Chinese capital market, and the demand for the Multi-layer capital market, Private Equity began to become an important way of getting the investment for the enterprise, which is an untraditional way besides the stock market. Not only provided the money, they are also helped the enterprise to develop by using their resource. At the same time, the development of the Private Equity industry raised a large number of public companies, advanced the M&A market between the companies. Otherwise, Private Equity could improve the investment efficiency, assist the high-technology companies to develop and help to upgrade the industry.In the first and the second part of this paper, I reviewed the study on Private Equity from domestic and foreign scholars. The third part, I compared the development, organization and supervision of the Private Equity between domestic and foreign. Unlike the foreign countries, Private Equity is still premature in China; the exit mechanism is not so abundant. The development of the Private Equity in foreign countries, bring the economic prosperity, excitation energy and the creative of the companies. Although the Private Equity industry is still young in China, but it can provide the vast space for the economic development, and infuse into the motive that economy development constantly and so on.The forth and the fifth part of the paper, the data are selected from growth enterprise market (GEM),280 sample companies are selected which is public from 2009 to 2012, in order to test the influence of the Private Equity to the public companies. The results show that Private Equity bas a positive impact on the companies. When the rate of the share held by Private Equity is growing, the performance of the company would be better, the results are the same when take the number of the Private Equity institutions instead of the share hold rate. Compare with the companies whose shares are not hold by Private Equity, the company which Private Equity held their shares would have the better performance.At the end of the paper, it is provide two policy suggestions:the first is that the government should strengthen the support through the tax reduction and exemption, boosted the talent and so on; the second is to improve and perfect the law environment. Not only protect the companies which is to be investment, but also provide the fair market to the investment.