Venture Capital, Characteristics Of Control Rights And Non-efficiency Investment

With high economic growth in our country, there is a widespread problem in SMEs: financ ing difficulties and non- efficiency investment. In the 1990 s, venture capital began in our country, the trading amount of venture capita l has reached 544.76 billion dollars, in a short 20 years. Venture capital is not only a kind of equity financ ing, it will be involved in the management process of the enterprise, provide additiona l value-added services. It will play an important role in corporate governance structure, technology development, and the sales order. Existing literature about the venture capita l and non-effic iency investment, is focused on venture capital directly affect the enterprise free cash flow to influence on overinvestment or underinvestment. But less research about the venture capital because of monitoring incentive effect, help enterprises to establish a more effective internal governance structure and the impact on enterprise’s investment decision-making.Therefore, this study have tested empirically from the perspective of venture capital’s effect on entrepreneur investment and financing behavior follow ing three questions: 1) whether the venture capital affect the non-efficiency investment behavior;(2) whether venture capital reduce the non-efficiency investment by improving the characteristics of control rights;(3) how is the effect of venture capital to the enterprise’s debt financing and equity financing?To solve those problems, this paper use a database of 354 enterprises in SME board and GEM during 2010-2013. Venture capital can weaken the non-efficient. With the increasing the separation degree of cash flow rights and control rights and the degree of ownership balance can promote the level of overinvestment and underinvestment. Venture capital can weaken this phenomenon. Fina lly, the venture capital can also help enterprises obtain debt financing and equity financing.Based on the above research results, this paper agree that after the enterprise IPO, venture capita l still can solve the problem of agency and asymmetric information through the supervis ion and management of enterprises, external authentication capabilities, and he lp enterprises to make reasonable decisions in the investment and financing problems.