The Impact Of Private Equity Investment On Corporate Performance

The development of China’s private equity investment market began in the 1980 s,and its purpose is to support the development of high-tech enterprises in various regions.Limited partnership was formally implemented in 2006,which greatly lowered the entry threshold of private equity institutions,making the development of private equity industry more diversified and the investment field more diversified.Following the establishment of small and medium-sized boards in Shenzhen in 2004,the establishment of GEM in Shenzhen in 2009,the popularization of the new three boards in 2014,In November 2018,we set up the Branch Creation Board and pilot the registration system in March this year.,the field of private equity investment is more diversified and the exit channels are more diversified.Nowadays,the financing difficulty and the financing cost of small and medium-sized innovative enterprises are becoming more and more obvious.In theory,private-equity firms can not only get financial support,but also acquire advanced technology and management experience,so as to improve corporate performance to a certain extent.However,the study found that the effect is not obvious.At present,a large number of scholars only stay in the field of SMEs and GEM,and most of the research contents are about the single variable of private equity participation.There is not much research on the new three-board which is mainly set up to solve the financing problem of small and medium-sized enterprises,and the research on the depth of private equity investment is even less.In recent years,private equity funds are rapidly entering the new third board market,and the expanded new third board has attracted more and more well-known private equity participation.Therefore,the studyof this issue can enhance our understanding of the relationship between private equity and the new three-board,enable enterprises to have a more comprehensive understanding of the investment operation of private equity,and ultimately make decisions conducive to the future development of enterprises.In this paper,empirical analysis and comparative analysis are mainly used.By combing the existing research results and related theories,combining the development of private equity investment at home and abroad as well as the development status of the new third board market in China,this paper theoretically analyses the relationship between private equity investment and corporate performance.In the empirical analysis,in order to reduce the impact of industry factors on the accuracy of the results,we selected manufacturing enterprises listed on the New Third Board from 2015 to 2017 as samples,and took the financial indicators of the year and the second year of the sample enterprises’ IPO as the research object,and selected ROE and ROA as indicators to evaluate the performance of enterprises.Through descriptive statistics and multiple regression analysis,this paper compares the impact of private equity investment on the performance of new third board enterprises vertically and horizontally,and compares the impact of the proportion of private equity holdings and the number of joint ventures on the performance of enterprises horizontally.The study finds that the participation of private equity investment has a significant negative impact on the operating performance of listed companies on the New Third Board;the number of private equity investment institutions and the proportion of private equity investment institutions have a significant negative impact on the operating performance of listed companies on the New Third Board.Thus,unlike the developed countries in the United States and Britain,China’s private equity market has no obvious "screening and supervision" and "certification" effect,and "adverse selection" effect is dominant.The main reasons for this negative impact are:China’s current capital market is not mature enough,the relevant policies,laws and regulations and market matching is not perfect;the professional ability of the private sector is insufficient;due diligence is lacking in the stage of investment screening;the short-sighted speculative mentality of private equity institutions is obvious,and the management after investment is not paid attention to.On the basis of the research results,this paper puts forward corresponding policy suggestions on how to better play its function and how to better improve the performance of listed companies on the new third board,including: improving the exit mechanism of private equity funds;promoting the training and introduction of talents;strictly checking the investment objects;and improving the post-investment service management.With the emergence of STB,it enriches the capital market,provides a new exit channel for private equity investment,and also puts forward higher requirements for listed STB enterprises.This means that private equity investment will provide better services to the invested enterprises and help them develop their business.The innovation of this paper is mainly embodied in the innovation of research object,and model.The manufacturing enterprises are selected as the research object to avoid the influence of industry factors on the accuracy of the results.At the same time,the data of relatively sound period of private equity development are selected,and the panel data of listed companies from2015 to 2017 are used for regression analysis,which improves the robustness of the regression results.Due to the limitations of information disclosure of new third board enterprises,someenterprises with missing data are eliminated in data processing.Meanwhile,this paper uses data spanning only three years,so the results of this study may have some errors.