Venture capital or private equity? The Asian experience

Naqi, Sayed Ahmed; Hettihewa, Samanthala

doi:10.1016/j.bushor.2007.03.001

Cited by 42 publications

(11 citation statements)

References 12 publications

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“…Although Asian VC activities have shown remarkable growth in the past two decades, researchers have expressed concern that most VC investment in Asian countries could be better described as private equity investment (see e.g., Naqi and Hettihewa ), which is generally known as investment in equities that are not publicly traded. Naqi and Hettihewa () identified the major characteristics of Asian venture capitalists that make their investments look more like private equity than a traditional VC investment. For example, unlike practices in the United States, many VC investments in Asia are not technology‐ or innovation‐driven.…”

Section: A Conceptual Framework In Studying the China Vc Market And Rmentioning

confidence: 99%

The Effect of Venture Capital Investment-Evidence from China's Small and Medium-Sized Enterprises Board

Yue-jin

Huang

2012

Journal of Small Business Management

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In this paper, we use a matched sample to empirically test the effect of venture capital investment on the companies listed on the Small and Medium‐Sized Enterprises Board in China. We find that Chinese venture capitalists neither add value to their invested firms in the initial public offering (IPO) process nor improve operating performance. Rather, compared with their non‐venture‐backed counterparts, venture‐backed firms are associated with a greater level of IPO underpricing and inferior operating performance both before and after IPO. Our findings in China support neither the certification/monitoring hypothesis nor the grandstanding hypothesis, but partly support the adverse selection hypothesis.

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Section: A Conceptual Framework In Studying the China Vc Market And Rmentioning

confidence: 99%

The Effect of Venture Capital Investment-Evidence from China's Small and Medium-Sized Enterprises Board

Yue-jin

Huang

2012

Journal of Small Business Management

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“…This study uses sponsor to represent both sponsors and underwriters. 7 PE and VC investors are referred to as PE in this paper because, as indicated by Bruton et al (2002) and Naqi and Hettihewa (2007), VC investors in the context of emerging markets are actually PE, in contrast to this term's meaning in the US market. This paper uses a dummy PE as a proxy for both PE-and VC-backed IPOs.…”

Section: Introductionmentioning

confidence: 99%

Does political capital create value in the IPO market? Evidence from China

Liu

Tang

Tian

2013

Journal of Corporate Finance

174

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This study examines the value of political capital in the Chinese IPO market. We find a positive relationship between a politically connected executive and the probability of IPO approval of entrepreneurial firms. We further identify that shareholders value those connections and give a market premium to connected firms after the firms go public. We provide evidence that other types of political capital gained through external sources, such as politically connected sponsors and PE investors, also bring benefits to the firms in their IPO approval, and these connections substitute for the effect of the executive's political connections on IPO approval. We argue that in emerging markets where government intervention is still prevalent, political capital does create value and entrepreneurial firms usually build political capital to facilitate their access to the IPO market, although other types of political capital do not bring further benefits into the post-IPO market. ABSTRACTThis study examines the value of political capital in the Chinese IPO market. We find a positive relationship between a politically connected executive and the probability of IPO approval of entrepreneurial firms. We further identify that shareholders value those connections and give a market premium to connected firms after the firms go public. We provide evidence that other types of political capital gained through external sources, such as politically connected sponsors and PE investors, also bring benefits to the firms in their IPO approval, and these connections substitute for the effect of the executive's political connections on IPO approval. We argue that in emerging markets where government intervention is still prevalent, political capital does create value and entrepreneurial firms usually build political capital to facilitate their access to the IPO market, although other types of political capital do not bring further benefits into the post-IPO market.

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“…In particular, the regulation of IPOs and the active involvement of state in capital m arkets and VC investments probably constitute the key institutional context to understandin g domestic VC activities in China. The ongoing interests of governments of different level s in providing funds for VC firms might continue to shape the geography of VC activities in the country (White et al 2005, Naqi andHettihewa 2007).…”

Section: Resultsmentioning

confidence: 99%

The rise of venture capital centres in China: A spatial and network analysis

2016

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Due to the importance of venture capital (VC) firms in spurring regional economic growth, the geography of VC firms and VC investments have attracted a lot of attention. However, the spatial patterns of cross-regional VC flows have rarely been explored, particularly in the context of emerging economies. Drawing on a unique dataset on VC firms and investments related to domestic initial public offerings (IPOs), this study combines location analysis with network analysis to investigate the spatial patterns of VC activities in China. The results confirm that Beijing, Shenzhen and Shanghai are the leading VC centres in the country. Although Yangtze Delta Area hosts the largest number of investments, Beijing and Shenzhen have a considerable advantage over Shanghai in terms of the number of VC firms, investments, and the number of domestic VC-backed IPOs. Beijing and Shenzhen also appear more central than Shanghai in China's VC networks, with Beijing-Shenzhen representing the most important city-dyad in terms of VC investment flows. The article explains how the dynamics of the VC centres is embedded in China's institutional and cultural context, critical to understanding the evolution and geography of China's VC industry.

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Venture capital or private equity? The Asian experience

Cited by 42 publications

References 12 publications

The Effect of Venture Capital Investment-Evidence from China's Small and Medium-Sized Enterprises Board

The Effect of Venture Capital Investment-Evidence from China's Small and Medium-Sized Enterprises Board

Does political capital create value in the IPO market? Evidence from China

The rise of venture capital centres in China: A spatial and network analysis

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