Does Foreign Venture Capital Provide More Value-added Services to Initial Public Offering Companies in China

This paper uses all 1404 initial public offerings （1PO） undertaken between 2002 and 2012 in China to analyze whether venture capital （VC） investment, especially foreign VC investment, brings more or less value-added services to the invested companies during the 3 years following the IPO. The results...

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Bibliographic Details
Published in:China & world economy 2016-03, Vol.24 (2), p.90-106
Main Authors: He, Yin, Li, Bin, Tian, Yunhua, Wang, Lijun
Format: Article
Language:English
Subjects:
China
Demutualization
F21
Foreign investment
foreign venture capital
G24
G32
Going public
Initial public offering
Initial public offerings
IPO
profitability
value
Value added
Venture capital
Venture capital companies
中国
增值服务
外国投资
潜在价值
盈利能力
资本家
风险投资
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Summary:This paper uses all 1404 initial public offerings （1PO） undertaken between 2002 and 2012 in China to analyze whether venture capital （VC） investment, especially foreign VC investment, brings more or less value-added services to the invested companies during the 3 years following the IPO. The results show that venture capitalists choose to invest in companies with higher value potential, and, in turn, the value of the companies increases after the 1PO is undertaken;foreign VC adds more value to companies than domestic venture capital. However, the profitability of VC-backed and non VC-backed companies after IPO does not differ significantly. Nevertheless, it is shown that VC plays an active role in China.
ISSN:1671-2234
1749-124X
DOI:10.1111/cwe.12152