The Empirical Study Of Private Equity’s Impact On The Long-term Development Of SME Listed Enterprises

Small board of listed companies officially started in our country of2004, as it providesIPO (initial public offering) exit way for private equity investment in the domestic capitalmarket. Since then, private equity investment begins rapid development in China, and it hasproduced great influence in China’s economic growth, innovation promotion, creating jobopportunities, fostering entrepreneurs and so on. PE has been an indispensable driving forcein promote China’s economic growth as well. At present, private equity investment in Chinahas become an important means of financing after bank loans and IPO in China. It constitutesan integral part of China’s financial system. That’s why recently domestic research in privateequity has been developed.Private equity investment in our country appeared relatively late. Private equity financialmarket hasn’t developed very well and the actual transaction data is not abundant. Theresearch about domestic private equity investment is in its infancy. At present, majority ofresearches on private equity investment stay at the theoretical level. There are lacks ofempirical research used domestic actual transaction data as basis. Although in recent yearssome scholars study on the data that initial public offered by listed companies or the data ofcompanies within one year after they listed, we still lacking of research on the long-term dataof listed company. We also need the long-term data to verify the development of company, sothe empirical study of private equity’s impact on the long-term development of SME boardenterprises is very necessary.First, this paper defined private equity investment and related concepts in the basis ofdrawing on Chinese and foreign scholars’ research. We compared respectively the privateequity and other investments, private equity markets and other funding markets. The paperalso described the development process of private equity investment in China and theobstacles they facing.Secondly, this research chose39listed companies’ eight years’ consecutive data in2004 -2011transaction which companies were SME Listed IPO in Shenzhen and annual report asthe research object. we selected the ROE, earnings per share, with or without private equity,asset debt ratio, firm size and main business revenue growth of these indicators as variable,and contrast private equity investment company, no private equity investment firm and allsamples’ long-term development to test our listed private equity investment’s influence to thelong-term development of SME. Through empirical testing and comparative analysis, theprivate equity investment firm developed better in long-term than the firm without privateequity investment. Ultimately we get a conclusion that private equity investment is good tothe invested companies’ long-term development.Finally, the research will make some suggestions to our government agencies, oversightstructures on how to make private equity investment get fast and good development in China.We would give some advices to the companies which haven’t listed with developmentpotential in choosing investors to get finance in order to help them listing successful andhaving a good long-term development.