The Research On The Impact Of Venture Capital Participation On Internal Control Quality Of Listed Companies

Since the launch of Shenzhen GEM in 2009,the development of venture capital industry has entered a new era.Since 2000,the number of venture capital institutions in China has been growing at an average annual rate of 29.7%,and the characteristics of companies listed on the GEM have been favored by venture capital.In order to obtain high returns,venture capital institutions usually participate in the governance process of enterprises in the form of controlling equity,which can not only solve the financing difficulties for small and medium-sized enterprises,but also provide more value-added services for enterprises with their professional skills and social resources.Internal control is an important means of enterprise management.In order to achieve normal production and operation and sustainable development,enterprises need to establish and improve the internal control system,improve the quality of its internal control constantly,so as to improve the efficiency of corporate governance.Therefore,based on the impact of venture capital on corporate governance,this paper analyzes the relationship between venture capital participation and internal control quality.This paper mainly studies the effect of venture capital participation on the internal control quality of listed companies.This paper analyzes the following three issues based on the influence of venture capital on internal governance of listed companies and combined with the influencing factors of internal control of the company.The first one is whether the participation of venture capital has an impact on the enterprise internal control quality;the second one is whether the shareholding ratio of venture capital institutions has a different impact on the internal control quality;and the third one is whether venture capital institutions with different reputations have different influences on the enterprise internal control quality.This paper adopted the research method of combination of normative analysis and empirical research to analyze through the following parts.Firstly,it expounded the research background and significance of the impact of venture capital participation on the enterprise internal control quality;secondly,it summarized the literature about the relationship between venture capital and internal control at home and abroad;thirdly,it analyzed the influence mechanism of venture capital participation on internal control quality from the perspective of principal-agent theory,corporate governance theory and certification supervision hypothesis and deduces the research hypotheses in this paper;fourtly,taking the A-share listed companies from 2010 to 2017 as the research samples,the basic analysis of the samples was obained through descriptive statistics and correlation analysis,the research hypothesis was verified in the way of multiple regression,and then the regression results were tested again by robustness analysis to ensure the reliability of the research results.Finally,on the based of the empirical results,the research conclusions and policy recommendations are drawn.In this paper,we found that the internal control quality index of enterprises with venture capital participation is higher,and plays a significant role in non-state-owned enterprises.After further research on the effect of the shareholding ratio of venture capital institutions on internal control among the top ten shareholders,it is found that among the top ten current shareholders of the company,the higher the proportion of shareholdings of venture capital institutions is,the higher the internal control quality of listed companies will be;the higher the reputation of the venture capital institutions participating in the listed company is,the better the internal control quality of the listed company will be.The main contributions of this paper are reflected in the following aspects.Firstly,this paper makes a new thinking based on the venture capital effect on corporate governance and the influencing factors of internal control.The main literatures on venture capital are focused on the IPO pricing efficiency,financial performance,enterprise innovation and investment and financing efficiency.However,there is little research on how venture capital affects the enterprise internal control.As to the influencing factors of internal control,few literatures have studied the influence of venture capital,a special investor,on internal control.This paper gives a new thinking on the influence mechanism of venture capital on enterprises from the perspective of internal control.Secondly,on the basis of studying whether venture capital has a significant effect on the internal control quality,this paper further discusses whether venture capital has different effects on enterprises of different equity nature and whether the shareholding ratio and reputation of venture capital have different influences on the internal control quality,so as to further analyze the influence mechanism,and enrich the research.In this paper,the internal control index of Dibo is only selected as the measurement standard of internal control quality,and there is no research on whether the different background of venture capital has different influence on the internal control quality of the invested enterprise.The deficiency of this paper will be explored in the subsequent research.