An Empirical Study On The Effect Of Venture Capital To The IPO Effect In The GEM

Under the drive of building an innovative country, innovativecompanies in our country had a remarkable development. However, innovativecompanies in our country have been faced with difficult financing problem:government subsidies are too little and low efficiencent to solve this problemthoroughly; Bank loan exsits problems that program is too trival to approve, theamount is limited with financial risk, which promote the birth of venturecapital(VC). Matching in many aspects, VC and innovative companies developcommonly, especially since the birth of the GEM, on the one hand, it provides anew financing channel for innovative enterprises; on the other hand, it providesa better exit way for VC. Basing on the same motivation of listing, VC andcompanies in the gem ties closely on this behavior.Since1994when scholars Jain B.A. and Kini. O. found that theperformance declines significantly after listing and proposed the IPO effect,scholars all of the world focused on this field. According to the past studies, wefound that IPO effect esists in the vast majority of capital market. Due to theGEM in our country is not mature yet, the study of IPO effect in the GEM israre and in the shallow level. Considering the closely contact in listing betweenrisk VC and enterprises in the GEM, this paper discovered the existence of IPOeffect in the GEM of our country firstly, and participated on the effect of VCand its attributes to the IPO effect in the GEM.This paper selected the companies listed in the GEM form2009to2011asthe research object, which is divided into research samples and contrast samplesaccording to the presence of VC, and chosed eight financial indexes using theaverage rate of change to represent degree of the e IPO effect. Firstly, throughpreliminary description and statistical analysis we found that existing rate ofIPO effect were rising year by year, and the degree of IPO effect increased year by year. Secondly, through significance test we found that IPO effectwidespread in the GEM, combined with the regression analysis, we found thatVC intensified degree of IPO effect measured by ROE and the Growth Ratio ofnet profit and Receivables Turnover Ratio. And through further groupedregression analysis we could find that VC’s geographical proximity and statebackground has significant strengthening effect and good reputation on IPOeffect, the stake of VC within5%~20%and VC participated in the investedenterprises management deeply had significant inhibitory effect on IPO effect,but the joint investment and exit time had no significant effect on IPO effect.On top of that, we put forward effective and feasible policy and suggestionsfrom three aspects: building enterprises in the GEM, venture capital investmentsystem and operating mechanism in the GEM, in order to to weaken the IPOeffect in the GEM through efforts from various aspects.Innovation of this paper lies in: we chose the rate of change of thecorresponding indicators to measure the degree of IPO effect, with higher levelof explaination of regression results; we divided sample into four groupsaccording to the proportion of VC stake respectively through regression; it wasconcluded the effect of different properties of VC on IPO effect under differentproportion of VC stake, enhancing the practicability of research results. Due tothe limitation of samples, ignorance of non-financial factors and controlvariable, this problem also needs to be studied further.