| IPO(Initial Public Offerings)as an important channel for entrepreneurial firms to raise funds have a great significance for these firms.Entrepreneurial firms can not only access to capital investment through the IPO,but also benefit from IPO’s operational and regulatory requirements,which are conducive to the standard management of the company to add its value.Therefore,innovative firms have a strong motivation of IPO.Meanwhile,Venture Capital has been active in the capital market as an important contributor to the IPO of the innovative company.According to statistics,by October 23,2015 among the GEM-listed firms,more than 60%have VC background,so the status and role of VC cannot be overlooked.In this paper,484 firms successfully listed on the GEM by Oct 23,2015 are selected as research objects to test whether VC can identify high-quality firms in advance,improve IPO performance and supervise the company afterwards to support its growth.Results show that:(1)In China,VC does not choose to invest in high-quality firms.However,the worse a company’s operating performance is,the easier it can access to VC investment.(2)VC background cannot significantly improve a company’s IPO first day performance,while the background of the state-owned holding can largely increase the first day close.(3)VC-backed firms do not have obvious advantages in their operating performance,and VC cannot effectively supervise and support the growth of the firms.(4)There is a strong inverse selection effect in China’s capital market.Finally,on the basis of the empirical analysis,some policy suggestions are proposed:We should improve the market mechanism and the examination mechanism of the GEM,reduce the issuance income of the listed firms,weaken the motivation of the firms that are inadequate for listing,establish and improve the rating mechanism of VC,prevent VC from excessively pursuing private interests through system supervision and fulfill our social responsibilities. |
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