The Impact Of VC?VC Director On Executive Turnover

The phenomenon of executives quit together has always been the focus of SME board and the GEM.In the capital market,the sudden executives turnover has obvious negative effects on the operation and management of listed companies and the share price performance.In particularly,this phenomenon will hinder the sustainable development of enterprises,and affect the interests of employees and shareholders.The most important thing is that the executives resign the cash affects the long-term development of the stock market.If it is not dealt with for a long time,it is likely to cause serious social problems.Specifically,venture capital improves the governance level of the invested company in two ways: participate in shareholders' meeting to exercise shareholders' power;send a person to the board of directors to exercise the rights of the director.Venture capital can play a positive role in supervising the management of the invested enterprise by sending the directors to the invested enterprises.Because it is different from the appointment mechanism of independent directors,the directors sent by venture capital(VC directors)are not subject to management constraints,and their supervisory motivation is stronger.This paper will take the governance role of venture capital as a breakthrough point to study the impact of venture capital and directors on executives turnover and expect that venture capital and directors can inhibit the executives turnover.Based on the companies listed in the period from 2004 to 2016 on China's SME board and the GEM as the research object,mainly uses the propensity score matching(PSM).The results of the empirical results show that: firstly,the intervention of venture capital and VC directors will affect the turnover rate of the chairman,but will not affect the turnover rate of the general manager.Second,the intervention of venture capital and the VC directors will improve the chairman's passive turnover rate and restrain the chairman's active turnover rate.But in general,The impact of VC directors on executive turnover is not as significant as risk investment,probably because VC directors quit early.Third,compared with the state-owned enterprises,state-owned enterprises in the non investment risk sample has stronger effect on the rate of turnover of the chairman,but for the VC directors,it is no different to enter the state-owned enterprises or non state-owned enterprises,The effect on the turnover rate of the chairman is the same.Fourth,non-state-owned background venture capital and state-owned background venture capital can improve the passive turnover rate of the chairman,while the state-owned background risk investment has no significant correlation with the chairman's voluntary turnover rate.The research has provided the empirical support and the new research direction for the venture capital to play a governance role in China's capital market,enriching the literature of venture capital and its directors,and providing some suggestions to promote the development of venture capital industry.