Effects Of Syndication’s Participation On Agency Cost

In recent years, venture capital has become one of the most important sources for small and medium-sized enterprise and innovation enterprise in our capital market. Research shows that, risk investment institutions in addition to bring needed funds for the enterprise, also can bring added value through brand value, resources, guidance and consulting and management experience to the enterprise, at the same time, make an effective supervision of corporate governance.In a number of venture investment project, syndication is preferred for dispersing risk and improving investment income. According to the statistics of the capital market, the united way of the venture investment ratio has reached more than 50% in small board and setup board from 2008 to 2011, joint investment has become a important form between venture capital.This paper, based on the literature induction and theoretical analyses, chooses domestic listed companies with venture capital participation as samples, intends to study the impact of its participation on agency cost, and explores to define management capital, set-up time, the number of completed investments, the number of existed investments as characteristic indexes to divided syndication into "strong-strong"、"strong-weak"、"weak-weak" syndication to find the difference between the three kinds of syndication. The empirical test shows that the agency costs of joint venture are lower than the independent venture capital ones. Results show that the ranking of the venture capital syndication "Synergy Effects" is strong-weak syndication, strong-strong syndication, and weak-weak syndication. After proving syndication’s effect through empirical analysis, this paper, taking X electronic ltd. And L ltd. as an example to make an comparative analysis of the agency costs between syndication and independent venture capital after the listing of three years, and further explains the role of syndication in reducing agency cost in this case. Finally, this paper gives some suggestions respectively from the venture capital enterprise and the invested enterprise.