The Impact Of Venture Capital Withdrawal On The Performance And Stock Price Of Listed Companies

Venture capital is a kind of equity capital invested in emerging and unlisted companies through private placement.Its main profit model is to obtain income through public offering(IPO),sale or merger(M&A),liquidation and bankruptcy.As an important capital force to promote innovation and entrepreneurship,the development of venture capital in recent years is booming and continues to rise.In the process of vigorous development of venture capital institutions,the role of venture capital in its shareholding companies has become increasingly prominent,and has gradually become a hot spot of concern to all sectors of society.The academic community has also carried out related research and formed some mature theories-certification theory,screening and monitoring theory and grandstanding theory.Many scholars hope to prove the role of venture capital by studying the impact of venture capital on the performance and stock price of listed companies from the perspective of venture capital investment.However,from the existing literature,certification theory,screening and monitoring theory and grandstanding theory of venture capital are not universal in the national market.Whether these theories exist in China is still controversial.Limited by its own profit model,after investing in companies venture capital will find chances to withdraw eventually for achieving revenue.The impact of venture capital withdrawals on listed companies is equally critical.So how does the venture capital withdrawal affect the performance and stock price of listed companies? Can this further explain the role of venture capital in the domestic capital market? In order to solve these two problems,this paper takes the GEM listed companies in 2009-2016 as the research object,and studies the impact of venture capital withdrawal on the performance and stock price of listed companies by constructing fixed-effect models and event research methods.And reached the following conclusions:(1)The withdrawal of venture capital will have a significant negative impact on the performance of listed companies.The negative impact will last at least one year after the withdrawal of venture capital,and the monitoring effect of venture capital is confirmed.At the same time,this paper also finds that the performance before and during the withdrawal of venture capital will strengthen and prolong the adverse effects of venture capital withdrawal.(2)The withdrawal of venture capital will have a significant negative impact on the long-term performance of listed companies.The decline in performance in the first and second years after the withdrawal of venture capital was caused by the combined decline in total asset turnover(TAT)and rate of earning before interest and taxes(REBIT),and the decline in performance in the third years after the withdrawal of venture capital was due to the continued decline in REBIT,the rebound in TAT will reduce long-term adverse effects.(3)The negative impact of venture capital withdrawal on the performance of listed non-manufacturing companies is stronger,but the negative impact on the performance of listed manufacturing companies is more permanent.(4)The withdrawal of venture capital has no significant impact on the stock price during the withdrawal period.It has only a short-term negative impact on the stock price in the later period of withdrawal,and this negative impact is limited.It will weaken over time and will not exist for a long time.Moreover,there are industry differences in this negative impact,and it is also affected by the proportion of venture capital shares and the ownership of listed companies.The negative impact on the stock price of listed companies after the withdrawal of venture capital is mainly due to the disappearance of the “certification role”.(5)During the process of venture capital withdrawal,some special reduction events will have a significant negative impact on the stock price of listed companies,and the negative impact also varies depending on the proportion of venture capital shares or the ownership of listed companies.Finally,in view of the above conclusions,this paper puts forward corresponding suggestions from three aspects of listed companies,investors and regulatory authorities,and looks forward to the follow-up research according to the existing deficiencies of the article.