Empirical Study on The Influence of Venture Capital on IPO Underpricing Based on Structural Equations Model

摘要

This paper empirically investigated the inner mechanism of the influence of venture capital on VCbacked enterprises from Shenzhen Growth Enterprise Market (GEM).We selected 53 enterprises whose shares held by venture capital firms (VCs) were more than 4% as samples from Sep.23rd, 2009 to Aug, 31st, 2011. Based on structural equations model (SEM), our study indicates: the organization factor of VCs have obvious effects on IPO underpricing, which verifies the Market Power Model in Shenzhen GEM; the value of VC-backed enterprises also greatly influence the degree of IPO underpricing.In contrast, the participation of VCs in the enterprises doesn't have great impacts on the intrinsic value of the enterprises, mainly because the VCs tend to invest enterprises in whose profitable or Pre-IPO period; the participation of VCs also hardly influences IPO underpricing.At last, we propose suggestions based on our analysis.