Research Of Private Equity's Impact On Enterprise Performances

Private equity is capital that is not noted on a public exchange.Private equity is composed of funds and investors that directly invest in private companies,or that engage in buyouts of public companies,resulting in the delisting of public equity.Institutional and retail investors provide the capital for private equity,and the capital can be utilized to fund new technology,make acquisitions,expand working capital,and to bolster and solidify a balance sheet.Since 1990s,foreign private equity funds entered into China financial market.So far,it has formed a kind of innovative financial market.And the complete system of equity investment has been initial formed,including the startup,growth,mergers,acquisitions,and even the bankruptcy reorganization,providing financial support for minor enterprises.Private equity investment prefers investing in the high-tech enterprises with high-yield and high-risk.With the setup of the Shenzhen Growth Enterprise Market(GEM),which is oriented to the industry with high growth,the research on relationship of the private equity and the GEM became very necessary.Because the GEM was founded in 2009,there are not many current domestic research on the relationship of PE and GEM.There are a part of literatures study on the influence,but most studies set the explanatory variable as only a virtual variable,which interpreted as whether private equity investment existed or not,with a lack of the research on the classification of PE and on the influence degree.Such studies existed a series of problems,leading to the lack of empirical evidences on what aspects of PE affect the companies' operating performances and share price performances in the capital market.So this article will analyze the different ways that PE influences the GEM companies' operating performances in the basis of the current literature research.This paper attaches great importance to the combination of theoretical analysis and empirical analysis,synthetically using normative study,empirical study and comparative study to research into the problem that how private equity influences the companies' operating performances in the basis of the current literatures.In the first level,this paper use the cross-sectional model to research into whether the private equity affects the companies' performance.In the second level,this paper use the panel data model to analyze whether the awareness,the property and the number of the private equity plays a different role in companies' net profit margin,with the data of 2047 sets of observations.In the last level,this paper divides the awareness and the property of the private equity,in order to analyze how the private equity's proportion of shareholding makes influence to companies' operating performances.The results indicate that the participation of the private equity indeed make positive influence to the enterprises' performance.The number of the private equity has positive correlation to enterprises' net profit margin,and the difference of private equity's awareness as well as property has different affects to enterprises' net profit margin.But no matter whether the private equity is strategic or speculate,no matter whether the private equity has a high reputation or a low reputation,it all relates positively to enterprises' performance.That is,the increase of the private equity's proportion of shareholding will improve the enterprises' performance.