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Do venture capitalists function the same: The evidence from the Chinese newest stock market, ChiNext
Author(s) -
Beladi Hamid,
Chao Chi Chur,
Hu May
Publication year - 2018
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12534
Subject(s) - initial public offering , restructuring , venture capital , corporate governance , business , stock market , value (mathematics) , finance , social venture capital , government (linguistics) , stock (firearms) , empirical evidence , function (biology) , financial system , economics , monetary economics , mechanical engineering , paleontology , linguistics , philosophy , horse , epistemology , machine learning , evolutionary biology , computer science , engineering , biology
We examine the role of venture capitals ( VC ) in Chinese entrepreneurial firms surrounding their initial public offerings (IPOs) on ChiNext. We find VC s are more likely to invest in entrepreneurial firms close to their registered location. Unlike developed countries, Chinese VC s cannot significantly improve firms' corporate governance and operating performance on ChiNext. These results indicate these VC s are more free‐riders rather than value‐added investors. The empirical findings suggest Chinese government should restructure ChiNext or reform primary market regulations to encourage VC s to make more value‐added activities and improve the financing environment of small to medium‐sized enterprises. VC s are still new on the ChiNext.