Venture Capital、VC Director And Corporation's Investment And Financing Behaviors

Since entering the 21 st century,China's venture capital industry has made great strides in the environment of rapid economic development.The introduction of SME and GEM provided venture capital with an improved exit mechanism,the number of venture capital investments and the total amount of investment are growing rapidly.Venture capital institutions have a powerful and effective impetus for the stable development on the invested companies.By participating in the company's business decision-making process and corporate governance,venture capital institutions make overall strategic planning for the enterprise,improve the governance mechanism and governance environment,provide specialized value-added services to ensure the efficient operation of the company during the investment period.Therefore,studying the impact of venture capital institutions on the corporate governance of the invested companies is not only of theoretical significance,but will also promote the healthy and stable development of start-ups,improve corporate governance adn the companies' operating performance.In addition,as venture capital institutions invest more in high-tech enterprises,studying the role of venture capital institutions in their invested companies can promote the healthy and sustainable development of high-tech industry in our country.The purpose of this study is to examine the role of venture capital institutions in the listed companies' investment and financing behavior,through establishing empirical models and using real data.By studying the relationship between venture capital and the variables of listed companies' investment and financing behavior,we can better understand the mechanism of venture capital institutions on the invested companies and put forward reasonable suggestions for venture capital industry,and improve the management mechanism of China's start-up companies.This paper studies three questions: First,listed companies often encounter the problem of underinvestment and overinvestment,whether the participation of venture capital institutions can help the invested companies to solve the underinvestment and overinvestment problems through alleviating agency problems and information asymmetric? Second,if venture capital institutions can help with the underinvestment problem caused by internal cash shortages,the financing channels they provide are more from equity financing or debt financing? Third,whether the presence of VC directors,the government background of venture capital institutions,the high shareholding ratio of venture capital institutions,and the co-investment of venture capital institutions can amplify the impact on the invested companies' investment and financing behavior?Based on the sample of 1126 listed companies in SME and GEM in 2005-2015,this paper examines the impact of venture capital institutions on the investee companies' investment and financing behavior through multiple regression analysis,and draws the following conclusions: First,the more free cash flow the companiy have,the more serious the overinvestment problem,however,there is a weak positive correlation between free cash flow and overinvestment problem in VC-backed companies.Second,if the company's cash flow shortage is more serious,the underinvestment problem is more serious,however,there is a weak positive correlation between cash flow shortage and underinvestment in VC-backed companies,because VC-backed companies are able to obtain more short-term interest-bearing debt financing and external equity financing.Third,the venture capital institutions with different characteristics have different impact on the invested companies' investment and financing behavior.The venture capital institutions that present VC directors in the board of the invested companies can better suppress the phenomenon of overinvestment,venture capital institutions that present VC directors,have high shareholding ratios,make united investment and with non-government background can effectively increase external financing and alleviate the problem of underinvestment caused by internal cash flow shortage,government background venture capital institions can help invested companies to obtain more short-term interest-bearing debt financing.