Internal Control,Venture Capital And Merger And Acquisition Performance

After the successful listing on growth enterprises market(GEM),frequent mergers and acquisitions often occur among enterprises.The data show that only a minority of venture capital quit after listing.It will remain in the enterprise usually for one to three years and continue to play a role.In this paper,the impact of venture capital on merge and acquisition(M&A)performance is studied.In addition,Ministry of Finance has issued some guidance on internal control,which further strengthens the construction of internal control self-evaluation report disclosure and internal control assurance.Compulsory disclosure of enterprise internal control has become a tendency,and the research on internal control related issues is also flourishing in China.Therefore,this paper introduces internal control into the study of venture capital and M&A performance.This paper reaches conclusions by multiple regression:(1)The M&A performance of enterprises with venture capital background is significantly better than that of enterprises without venture capital background;(2)The M&A performance of enterprises with high quality of internal control is significantly higher than that of enterprises with low quality of internal control;(3)High quality of internal control can enhance the impact of venture capital on M&A performance.Take Gifore Agricultural Machinery Chain as a case,through event study,Tobin Q and factor analysis,the short-term market performance and comprehensive financial performance score of M&A with venture capital and good internal control are better than those of M&A without venture capital and with poor internal control.Moreover,the suggestions are as follows.The enterprises are supposed to introduce venture capital and strengthen internal control.The regulatory authorities are supposed to promote the development of venture capital and to guide venture capital to participate in mergers and acquisitions of enterprises,to guide enterprises to introduce venture capital through policies,and to strengthen the supervision of the construction of internal control of enterprises.For venture capital institutions,they should strengthen the internal control of the invested enterprises.The contributions of this paper are as follows:(1)It enlarges the scope of research on M&A object.Most of the M&A object are M&A of listed companies or large enterprises on the main board or even cross-border M&A.The M&A objects in this paper are gathered in the GEM;(2)It includes venture capital into the factors that affect the performance of M&A,this paper uses Tobin Q to express the performance of M&A while Li Yao uses CAR and ROA.It proves that venture capital does improve the performance of M&A from another point of view;(3)It introduces internal control into the research of venture capital and M&A performance,considering whether internal control will affect the improvement of M&A performance by venture capital.