The Influence Of Venture Capital On Corporate Governance

These years,Venture Capital has become a non-negligible investment force in Chinese capital market,which operates actively behind many well-known companies in China.For invested companies,venture capital is not merely a provider of corporate expansion funds any more,but more of a mentor,which helps companies to better their corporate governance structure,improve the efficiency of corporate governance and alleviate the negative influences from Principal-agent Problem.Corporate governance,as one of the core issues of enterprise management and control,is inextricably linked to the well-being of a company,which can form strong influences on the healthy long-term development of it.However,in reality,we have seen so many examples of corporate governance failures in Chinese open market.Although corporate governance level has risen in recent years,structures and mechanisms of corporate governance are still far from perfect.Particularly,after the financial fraud of Wanfu Biotechnology,many Chinese listed companies are facing the risks of delisting,which draws attentions from many scholars on this subject.Studies of company governance from the venture capital influence perspective is one of the most popular topics in the field,but still facing some constraints because of the short history of Chinese venture capital development as well as the applicability of foreign studies to domestic market.Therefore,researches of corporate governance from this perspective is still on the rise.Most listed companies in Chinese GEM are high-tech enterprises,which are emerging in Chinese economic development.The well-being of high-tech industry is highly focused in the capital market,consider the innovation-advocated and entrepreneurship characteristics in the era.In that case,this article takes the GEM listed company-Shenzhen Grace Science and Technology Co.,Ltd.as the research object,deeply analyzing the process,impacts as well as results of venture capital investment,and summarizing experience from the issue to provide some beneficial inspiration to other companies planning to bring in venture capital in the future.As for article structure,this paper firstly researches and sorts out the relevant domestic and foreign literatures about venture capital and corporate governance.In this part,it initially discusses the core concepts,then summarizes two types of agency problems of corporate governance and the motivations as well as paths of venture capital participation in corporate governance,which forms the foundation of the following case study.The case study can be divided into three parts.The first part is that venture capital can help to alleviate the first type of agency problem.Through the promotion and guidance of Christie Science and Technology Co.,Ltd.,venture capital has helped to implement the equity incentive plan,enhance the management between the managers' own interests and the long-term interests of companies,and reduce the short-term management behavior.At the same time,letting the technicians hold shares promotes the growth of the company's innovation capabilities and enhances its core competitiveness.The second part is that venture capital can help to alleviate the second type of agency problem.Through the assistance of Christie Technology to solve the company's control of the hidden dangers,improve the degree of the company's shareholding balance,and drive the standardization of corporate governance,it can ease the second type of agency problems.The third part evaluates the corporate governance index before and after the entrance of venture capital investment in Christie Science and Technology Corporation in order to comprehensively evaluate the impact of VC investment in resolving two types of agency problems and participating in corporate governance.Finally,this paper finds that the corporate governance evaluation index has been greatly improved,so the improvement is obvious.