Venture Capital, Cash- Cash Flow Sensitivity And Financial Constraints Of SME

From the New structural economics and realistic perspective, the current endowment factor of our country determines that the small and medium-sized enterprises(SMEs) as the main proportion is the optimal industrial structure. As the current financing environment mainly consists of the indirect financing, this paper thinks that SMEs are widespread facing the financing constraints due to their huge management risk, opaque enterprise information, higher bankruptcy rate. With the continuous implementation of increasing the proportion of direct financing policy, Venture capital(VC) industry has developed rapidly in our country. VC can make a direct capital injection effect to SMEs, at the same time, SMEs with VC background can enjoy the authentication function effect, which can decrease the level of the information asymmetry. During the process of VC getting involved into the SMEs, it also bring the additional value added services, therefore VC can largely weaken the level of the SME's financing constraints.Based on the perspective of asymmetric information theory and the financial data of the Main board listed companies from 2010 to 2013, this paper use the cash- cash flow sensitivity model to prove that small scale companies have an obvious cash-cash flow sensitivity relative to the big scale companies. We can tell the correctness of the measurement model.From two levels, this paper builds a venture capital participation the influence of small and medium-sized enterprise financing constraints, a framework for empirical analysis. The first level is based on static effects, to study how venture capital affect the financial constraint. By using the VC background and the development of VC as financing constraint index respectively, based on the cash-cash flow sensitivity model, we obtain the following two conclusions:(1) enterprises with VC background have a lower cash-cash sensitivity, namely that enterprises with VC background's financing constraint level are lower;(2) enterprises in the area with better VC development, get the lower sensitivity, which prove the VC industry can drop the level of financing constraint.The second level is based on the dynamic lay to find out the influence of VC on the SMEs. Based on the provincial panel data of VC industry, we construct an empirical model of the VC development and the financing constraint of SMEs. The result shows that the cash-cash flow sensitivity of SMEs are decreasing with the development of our country's VC industry. That is to say the development of VC can weaken the financing level of SMEs.This paper think VC has the complementary role to our country capital market and financial system. The government should vigorously develop the VC industry in order to solve the difficulty of SMEs financing.