The Effect Of Private Equity On Corporate Performance

Private equity investment,as a quality financing channels,relying on its rich investment experience covering a number of industries and areas and mature management team and ability to control specific markets,provide forward-looking strategic guidance for enterprises.They use their own reputation and resources to recommend suitable management for enterprises and improve the strategic vision and the management ability of the invested enterprise.Thus they can improve the value and the performance level of the company.In recent years,under the background of innovation policy,private equity investment developed rapidly in China.Universal PE craze began sweeping across the land of china.Whether private equity investment will have a significant impact on the performance of the invested enterprises is getting also more and more attention.In the case of private equity investment,there may exist the situation of the joint investment.Of the 853 listed companies which IPO during 2008 and 2012,nearly 49.7% has PE capital background.And of the 424 VC backed companies,nearly 57.5% has venture capital syndicate background.Syndication in venture capital is very common domestically and abroad.This paper use two aspects of theory and empirical research on the impact of private equity investment on corporate performance.From the theoretical analysis,the private equity investment institutions can not only help companies to broaden the financing channels,but also alleviate the principal-agent problem in the business process.And they can also provide management and strategic services for the company,improve the corporate governance structure,improve the company's competitiveness,so as to improve the company's performance and value.This paper use all the companies listed on China's small board and gem as the sample.First,through factor analysis,I extract an indicator which comprehensively reflect the company's overall performance(short term/long term)from the six performance indexes,and then use the indicator as explanatory variables to do multiple regression analysis about how the private equity and its internal characteristics may affect the corporate performance(short term/long term).The empirical study shows that private equity investment and leading private ownership will significantly enhance the short-term comprehensive performance of the company,but cannot significantly affect the long-term comprehensive performance of the company;the joint venture capital,the shareholding ratio of private equity investment institutions and the investment time have no significant impact on short-term and long-term corporate performance.