Research On The Economic Consequences Of Damage To Venture Capital's Reputation

At present,the investment market of China's venture capital(VC)and private equity(PE)is developing rapidly and is playing an increasingly important role in promoting the optimization and upgrading of industrial structure,promoting the development of high-teach industries and enhancing national comprehensive strength.As an important intangible asset,VC's reputation can not only bring benefits to VC itself,such as more smooth future fundraising,wider network of relationships and higher returns of investment,but also bring benefits to pioneering enterprises,such as better role of certification,better value-added services and performance improvement.However,the existing literature always studies the benefits that the VC's reputation can bring,but rarely studies the economic consequences once VC's reputation is damaged.Researching on this can not only enrich the theory of VC's reputation,but also provide some references for the healthy development of venture capital industry.Given this,this thesis explores the economic consequences when a VC's reputation is damaged,based on the case of SAIF Partners.The typicality of the case is: Firstly,the event of NVC battle for control experiences quite long time,spreads wide ranges and is influential;Secondly,major media fight to report the event,thus the process of the event is clear and the information of the event is complete;Finally,SAIF Partners' reputation experiences the process of being damaged and a certain degree of recovery,which can prove the great value of VC's reputation by contrastive analysis and enhance the credibility of the article.The process of case analysis is as follows: Firstly,according to the direction of public opinion after the outbreak of NVC battle for control,the annual ranking changes of SAIF Partners in the Zero2 IPO Group and China Venture to determine that the reputation of SAIF Partners is indeed damaged in the event.Secondly,comparatively analyzing the situation of fundraising,investment and exit of SAIF Partners,its similar VC: CDH Investment,industry's top 20 VC and the VC industry,so as to investigate the economic consequences on SAIF Partner's own market performance.Finally,using the event study,choosing the events that cause the most obvious damage and recovery to the reputation of SAIF Partners as the event day,calculating the abnormal returns and the cumulative abnormal returns of the listed companies invested by SAIF Partners during the window period,so as to investigate the economic consequences on the listed companies' marker performance.After investigating the economic consequences of the damage to SAIF Partner's reputation,this thesis draws the following conclusions: Firstly,as an important feature and key resource,VC's good reputation is of great value,it can not only bring various benefits to VC itself,but also to pioneering enterprises.Secondly,once VC's reputation is damaged,it will have adverse economic consequences on VC's fundraising,investment,management and exit.Finally,the damage to VC's reputation can also have adverse economic consequences on the performance of listed companies invested by VC,which is directly responded as the decline of stock prices of the listed companies when VC's reputation is damaged.This thesis can draw the following enlightenments: Firstly,in order to operate continuously,achieve higher returns of investment and strengthen the attractiveness to pioneering enterprises,VC should establish and maintain good reputation.Secondly,when pioneering enterprise brings in venture capital,it should pay close attention to VC's reputation and make good use of the advantages that VC's good reputation can bring.Thirdly,when VC provides high-quality value-added services to pioneering enterprises,at the same time,it should strengthen the monitoring services to ensure that all the activities of pioneering enterprises are under legal and compliance,and achieve the healthy and orderly development under the construction of legalization.Finally,when VC realizes that its reputation is damaged,it should disclosure the essence of the matter to the community promptly,strive to prove its innocence and maintain its good reputation.