Research On The Impact Of Private Equity's Participation In Board Of Directors On Corporate Value And Performance

China's private equity investment market has experienced explosive growth in recent years.According to data from Qingke Private Equity,China's equity investment market completed a total of 9,124 investment cases in 2016,which is about 20 times the number of investment cases 10 years ago.The impact of private equity investment on company value and performance can not be ignored.The existing research on the impact of private equity on the company's value and performance all regards the private equity to corporate governance as an exogenous given variable.And the research conclusion is quite different.Most studies point out that private equity investment has a positive effect on company value and performance.They attempt to explain it through screening effects,certification effects,market function hypothesis,supervision and governance.The other part of the study believes that private equity investment has no significant impact on company value and performance,and even has a significant negative impact on company value and performance.They point out that private equity investment does not play a certification role and a good supervisory governance role,and explains this point from the perspective of the pursuing reputation.This study takes the GEM listed companies since the establishment of the GEM in 2009 to the end of 2016 as the research sample,uses whether private equity investment to participate in the board of directors of the invested company to measure whether the private equity investment institution truly participates in corporate governance.Construct a theoretical analysis framework and make assumptions based on relevant theories such as principal-agent,information asymmetry and corporate governance.The model is empirically analyzed by least squares regression.At the same time,further regression is performed by the Heckman two-stage model to solve the endogeneity problem of the model.This study found that: First,regardless of whether or not to participate in the board of directors of the invested company,private equity investment has not significantly promoted the value of the company in the year of listing,one year behindand two years behind.Second,private equity investment and the addition of private equity to the board of directors of the investee company has a significant negative impact on company performance in the year of listing,one year behindand two years behind.Third,in the impact of board structure characteristic and behavior characteristic variables on company performance,the participation of private equity investment in the board of directors played a significant regulatory role.In the invested companies that PE participates in the board of directors,corporate governance variables based on the characteristics of the board of directors have a significant negative impact on company performance.The board structure characteristic variables include the number of board of directors,ratio of independent directors,the unity of the chairman and manager and the separation rate of the two powers,the board behavioral variable is measured by number of board meetings.The above empirical results show that private equity investment institutions have not played a good role in screening and certification.This study believes that because the perspective of the pursuing reputation and the objectives of private equity investment institutions and invested companies are inconsistent,the contradiction between the two parties is intensified after the private equity investment participates in the management of the invested company.The efficiency of corporate governance is reduced,and then reduces the performance of the invested company.In theory,this paper examines the relevant hypotheses proposed in the previous research on the impact of private equity on the company's value and performance,enriching the relevant theories like principal-agent theory and corporate governance theory in private equity research.In practice,the conclusions of this paper will help the market to look at private equity investment more rationally and help regulators strengthen supervision of private equity investment.