Does Venture Capital Add Value? Evidence from the Chinese GEM
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Venture capital plays a vital role in investment platforms, entrepreneurship, and the growth of emerging industries. Its impact on firm value generates improved returns for stakeholders. By addressing financing challenges, reducing costs, and enhancing internal governance and stock liquidity, venture capital has the potential to enhance firm value. This study explores the relationship between venture capital traits and the value of Chinese firms listed on the Growth Enterprise Market (GEM), offering valuable insights for corporations, venture capital investors, and policymakers. Empirical tests conducted on GEM-listed companies between 2011 and 2020 demonstrate the significant role of venture capital in certification, supervision, and value-added services. It effectively boosts the value of listed companies, primarily through improved governance and stock liquidity. The presence of venture capital, including its quantity, background, and proportion, directly contributes to enterprise value while indirectly creating value through governance and liquidity channels.
Abstract
Venture capital plays a vital role in investment platforms, entrepreneurship, and the growth of emerging industries. Its impact on firm value generates improved returns for stakeholders. By addressing financing challenges, reducing costs, and enhancing internal governance and stock liquidity, venture capital has the potential to enhance firm value. This study explores the relationship between venture capital traits and the value of Chinese firms listed on the Growth Enterprise Market (GEM), offering valuable insights for corporations, venture capital investors, and policymakers. Empirical tests conducted on GEM-listed companies between 2011 and 2020 demonstrate the significant role of venture capital in certification, supervision, and value-added services. It effectively boosts the value of listed companies, primarily through improved governance and stock liquidity. The presence of venture capital, including its quantity, background, and proportion, directly contributes to enterprise value while indirectly creating value through governance and liquidity channels.
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