Venture Capital Exits and the Structure of Stock Markets in China

2017 ◽  
Vol 12 (1) ◽  
pp. 1-40 ◽  
Author(s):  
Lin LIN
Keyword(s):  
Stock Market ◽  
Venture Capital ◽  
Capital Market ◽  
Stock Markets ◽  
Empirical Studies ◽  
Strong Relationship ◽  
New Venture ◽  
Venture Capitalists ◽  
Efficient Operation ◽  
Laws And Policies

AbstractExisting literature suggests a strong relationship between a vibrant venture capital market and an active stock market: venture capital flourishes when venture capitalists can readily exit from successful portfolio companies through IPOs, and IPOs are in turn facilitated by active and efficient stock markets. This article uses China as a case study to explore the connection between the stock market and venture capital market. Through empirical studies, this article confirms the existing literature by demonstrating a close connection between the stock market and venture capital market in China. It also refines the existing literature by finding that, for venture capital availability, laws and policies also matter in China. Strong and sustained law reforms and government policies aimed at improving the institutional structure and regulatory environment of the stock market can facilitate venture capital-backed exits, which in turn lead to an increase in new venture capital availability in China. Nonetheless, numerous IPO closures have led to freeze-ups in China’s venture capital market. Also, there remain a multiplicity of institutional impediments to the efficient operation of the stock market and the effective implementation of IPO reforms in China. These may in turn hinder the development of the Chinese venture capital industry.

The Shanghai-Hong Kong Stock Market

2015 ◽  
Vol 07 (03) ◽  
pp. 36-45
Author(s):  
Jing WAN
Keyword(s):  
Hong Kong ◽  
Stock Market ◽  
Capital Markets ◽  
Capital Market ◽  
Stock Markets ◽  
Market Access ◽  
Mainland China ◽  
Opening Up ◽  
Hong Kong Stock Market ◽  
The Capital Market

The Stock Connect scheme launched on 17 November 2014 was the first mutual market access between mainland China and Hong Kong stock markets. It is the biggest move ever in the opening up of the capital market. Experiences accumulated will be of great value to mainland regulators who will decide on how these experiences could be utilised for China’s future opening up of its capital markets and for accelerating renminbi internationalisation.

OTC Stock Market in China – The New Venture Capital Exit?

2015 ◽  
Vol 6 (2) ◽  
Author(s):  
Jing Li
Keyword(s):  
Stock Market ◽  
Venture Capital ◽  
Active Role ◽  
New Venture ◽  
Stock Exchanges ◽  
Market Making ◽  
Secondary Markets ◽  
Listed Firms

AbstractVenture capital is certainly important to a country in that it finances entrepreneurship and innovation. In recent years, secondary markets for private shares have emerged as an important node in the VC cycle by both facilitating interim liquidity for non-listed firms and providing external investors with the access to good pre-IPO shares. Ready and able to play an active role on both the exit and entry sides, are VCs more engaged in reducing or increasing their ownership in these markets? Based on a sample consisting of a total of 102 firms that have been quoted on China’s New Third Board from 2006 to 2011 year end, this paper finds that VCs were much more likely to increase than decrease their ownership – there have been 128 times of increases in contrast to 45 times of decreases. In particular, VCs actively took the opportunities of subscribing new shares issued in capital increases to increase their ownership. Out of the total 85 VCs that invested in the 102 firms, 33 were already there as of first quotation, 39 VCs subscribed new shares in capital increases, 33 VCs bought shares from existing shareholders, while only 11 exited. For the purposes of enhancing the attractiveness of the New Third Board as an exit venue, this paper argues that the market should work on increasing its liquidity from both the supply and the demand sides. As the successor of the New Third Board, the National Equities Exchange and Quotations largely manages to realize this by considerably broadening the pool of potential eligible firms and investors, and also by making available various additional mechanisms such as market making and call auctions to boost share transfers. As such, it is generally reasonable to argue that for those SMEs that are not yet able to directly list on public stock exchanges but are already in need for interim liquidity, the NEEQ does serve as a useful platform to achieve the purpose, and thus fills a gap in China’s VC cycle.

scholarly journals Pricing And Long-Run Performance Of The Venture-Backed And Nonventure-Backed IPOS

2011 ◽  
Vol 2 (6) ◽  
Author(s):  
Arvin Ghosh
Keyword(s):  
Stock Market ◽  
Venture Capital ◽  
Initial Public Offerings ◽  
Cash Flows ◽  
Venture Capitalists ◽  
Regression Equations ◽  
Public Offerings ◽  
Long Run ◽  
First Time ◽  
Prevalent Form

Initial Public Offerings (IPOs) were the most prevalent form to raise capital by firms wanting to go public during the last decade (1990 2000) in the United State. There were thousands of firms that went public for the first time, mostly in the technology-heavy NASDAQ stock market. Along with the regular IPOs came the IPOs backed by venture capitalists, who specialize in financing promising startup companies and bringing them public. As one-third of the IPOs were backed by venture capitalists during 1990 2000, our purpose here is to examine the pricing and long-run performance of the venture-backed and nonventure-backed IPOs that were issued in the NYSE and NASDAQ stock market during the period covered by our study. We have found, among others, that the venture-backed IPOs performed much better as compared to the nonventure-backed IPOs. The returns of the former were consistently higher than the latter during 1900 2000. Also, the price returns as well as the operating ratios and the growth of cash flows, were higher both in the NYSE and NASDAQ market. The regression equations also confirmed closer association with the independent variables belonging to the IPOs backed by venture capital than the non-venture capital.

Rational Speculative Bubbles in the Thai Stock Market: Econometric Tests and Implications

2007 ◽  
Vol 10 (01) ◽  
pp. 1-13 ◽  
Author(s):  
Sethapong Watanapalachaikul ◽  
Sardar M. N. Islam
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Emerging Market ◽  
Hazard Model ◽  
Investment Planning ◽  
Efficient Operation ◽  
Crisis Period ◽  
Speculative Bubbles ◽  
Emerging Stock Markets ◽  
Econometric Tests

Understanding of factors like economic fundamentals or bubbles that normally determine the returns of stock in any emerging market such as the Thai stock market is essential for academic, investment planning and public policy reasons. An empirical study of the existence of rational speculative bubbles in the Thai stock market is undertaken by using the Weibull Hazard model. The conventional Weibull Hazard model is used as a benchmark model for other speculative bubble models. Empirical results suggest the presence of rational speculative bubbles in the Thai stock market, especially during the pre-crisis period. While rational speculative bubbles were not present immediately after the post-crisis period, some were observed a few years after the crisis. A possible explanation for such a result concerning rational speculative behaviour and bubbles in the emerging stock markets could be attributed to the presence of market imperfections in emerging stock markets, requiring institutional and policy developments to ensure efficient operation of the stock market.

scholarly journals Co-Movements Of U.S. And European Stock Markets Before And After The 2008 Gloal Stock Market Crash

2015 ◽  
Vol 10 (2) ◽  
pp. 83-98
Author(s):  
Ilhan Meric ◽  
Lan Ma Nygren ◽  
Jerome T. Bentley ◽  
Charles W. McCall
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Empirical Studies ◽  
Portfolio Diversification ◽  
Stock Market Crash ◽  
Market Crashes ◽  
Before And After ◽  
European Stock Markets ◽  
Global Stock ◽  
The U.S

Abstract Empirical studies show that correlation between national stock markets increased and the benefits of global portfolio diversification decreased significantly after the global stock market crash of 1987. The 1987 and 2008 crashes are the two most important global stock market crashes since the 1929 Great depression. Although the effects of the 1987 crash on the comovements of national stock markets have been investigated extensively, the effects of the 2008 crash have not been studied sufficiently. In this paper we study this issue with a research sample that includes the U.S stock market and twenty European stock markets. We find that correlation between the twenty-one stock markets increased and the benefits of portfolio diversification decreased significantly after the 2008 stock market crash.

Venture Capital, Angel Capital, and Other Finance, IPOs, and Acquisitions

2021 ◽  
pp. 353-369
Author(s):  
Lin Lin
Keyword(s):  
Stock Market ◽  
Mergers And Acquisitions ◽  
Venture Capital ◽  
Initial Public Offerings ◽  
Capital Market ◽  
Private Equity ◽  
Small Enterprises ◽  
Access To Finance ◽  
Entrepreneurial Ventures ◽  
Public Offerings

This chapter focuses on the development of non-bank financial institutions, particularly venture capital (VC), angel capital, private equity, and foreign funds, and their role in funding entrepreneurial ventures in China. It discusses the development of the venture capital market and the evolution of domestic and foreign funds in China. It examines the exits of VC-backed companies through initial public offerings (IPOs) and mergers and acquisitions and explores the connection between the stock market and VC market in China. It also evaluates recent institutional improvements and regulatory reforms for facilitating access to finance for small enterprises in China, especially the recent reforms to the stock market.

scholarly journals Integrasi Dinamis Pasar Modal Indonesia dengan Pasar Modal International pada Masa Pandemi Covid-19

2021 ◽  
Vol 3 (2) ◽  
pp. 143-151
Author(s):  
Stefany Cindy Sugiyanto ◽  
Robiyanto Robiyanto
Keyword(s):  
Stock Market ◽  
Capital Market ◽  
Stock Markets ◽  
World Economy ◽  
Contagion Effect ◽  
Global Crisis ◽  
Stock Indices ◽  
The World ◽  
Closing Price ◽  
Dynamic Integration

The Covid-19 pandemic has an impact on the world economy especially on the stock mar-ket, thus the aim of this study is to determine whether there is dynamic integration be-tween the stock markets in Indonesia with the capital market in Asia and in the world during Covid-19 pandemic. This study uses return data from the closing price of 12 stock indices, namely ASX, DOWJONES, FTSE, HANGSENG, IHSG, KLSE, KOSPI, NIK-KEI, PSEI, SET, STI, and TAIWAN from January to December 2020 that have been ana-lyzed using DCC-GARCH. The results showed that the stock markets of both Indonesia, Asia and the world were dynamically integrated due to the global crisis of the Covid-19 pandemic. The results showed that there was a contagion effect on the stock market that occurred during the period when the Covid-19 pandemic crisis occurred. This research can be a reference for investors who want to invest in stocks in Indonesia during the Covid-19 pandemic. DOI: https://doi.org/10.26905/afr.v3i2.551

scholarly journals Herd Behavior in Venture Capital Market: Evidence from China

Mathematics ◽  
2021 ◽  
Vol 9 (13) ◽  
pp. 1509
Author(s):  
Ruijun Zhang ◽  
Xiaotong Yang ◽  
Nian Li ◽  
Muhammad Asif Khan
Keyword(s):  
Venture Capital ◽  
Emerging Economies ◽  
Capital Market ◽  
Policy Implications ◽  
External Information ◽  
Herd Behavior ◽  
Venture Capitalists ◽  
Information Uncertainty ◽  
Essential Information ◽  
Steady Growth

This paper aims to empirically analyze the herd behavior in the VC market in the context of China, including the existence, causes and consequences of herding among venture capitalists. For our empirical analysis, we first construct a herding measure and confirm the existence of herd behavior in the Chinese VC market. Then, we perform OLS/logit regression to examine the causes and consequences of herding among venture capitalists. Our results suggest that herd behavior in the venture capital market are driven by positive signals of essential information and a higher degree of information uncertainty. However, we find no evidence of the influence of feedback trading signals on herding among venture capitalists. Further analysis suggests that a better external information environment would help weaken the herding among venture capitalists, while their reputation concerns might amplify the herding effect. Finally, we examine the economic consequence of the herding and find that the herd behavior of venture capitalists would have an adverse effect on their exit performance. In addition to the enrichment and development of herding theory, our study also provides an essential theoretical frame and policy implications for the steady growth of the venture capital market in emerging economies.

Government roles in venture capital development: a review of current literature

2015 ◽  
Vol 4 (3) ◽  
pp. 367-391 ◽  
Author(s):  
Lisa Jane Callagher ◽  
Peter Smith ◽  
Saskia Ruscoe
Keyword(s):  
Venture Capital ◽  
Capital Markets ◽  
Capital Market ◽  
Financial Incentives ◽  
Empirical Studies ◽  
Entrepreneurial Activity ◽  
Market Development ◽  
Future Research ◽  
Content Type ◽  
Capital Development

Purpose – Interest in venture capital markets continues to be of relevance to politicians and policy makers, recognizing the importance of government participation in venture capital market development. Yet advice regarding developing venture capital markets appears increasingly disparate. The paper aims to discuss these issues. Design/methodology/approach – The authors engage the assumptions that underpin three dominant policy approaches to the development of venture capital markets with regard to the role of governments in that process. The authors categorize existing empirical studies against three approaches and give examples of the different government policies associated with the various approaches. Findings – Direct and indirect approaches recognize the importance of active stock markets but largely ignore the dynamic processes of markets, asserting that the provision of capital, institutional changes, and financial incentives ex ante will cause a positive market reaction, regardless of the market’s context. The recent timed approached is purported as being more comprehensive in its awareness of the need to adapt to countries’ contexts and the need for varying policies at the different stages of market emergence. Research limitations/implications – Limited empirical research tests the voracity and limitations of the timed approach. The challenge in doing so is that evolutionary theories typically explain an event after it has occurred, thus its predictive power is often limited. Future research might investigate the efficacy of policy levers based on the timed approach. Practical implications – The authors highlight the need for the development of venture capital markets, rather than a venture capital industry. Originality/value – The authors extend the existing venture capital market development categories and evaluate each approach in terms of the efficacy of government’s roles in venture capital market development in light of the existing evidence of economic development and entrepreneurial activity.

Access to finance for innovation: the role of venture capital and the stock market

2011 ◽  
pp. 165-183
Author(s):  
Francesco Bogliacino ◽  
Matteo Lucchese
Keyword(s):  
Stock Market ◽  
Venture Capital ◽  
Capital Market ◽  
Small Firms ◽  
Structural Features ◽  
Access To Finance ◽  
First Case ◽  
D Investment ◽  
New Jobs

Financial constraints for young and small firms can prevent them from contributing to innovation and the creation of new jobs. The paper analyzes two of the several institutional mechanisms implemented to overcome that hurdle: the development of the venture capital market and access to the stock market. The analysis is based on the information provided by two of the scoreboards used to monitor innovative activity in Europe: the IUS (Innovation Union Scoreboard) and the R&D Scoreboard. The former was used to study the determinants of venture capital/GDP intensity in Europe. The second was used to try to assess the stock market's contribution to R&D investment. The results show that, in the first case, the venture capital market complements structural features such as R&D intensity and market capitalization, is more volatile, and seems uninfluenced by competition-adverse regulations; in the second case, the analysis indicated that unlisted SMEs are more research intensive.

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