Mixed Ownership and Firm Performance: Evidence from the Chinese Venture Capital Industry

63 Pages Posted: 17 May 2015 Last revised: 18 Jan 2019

See all articles by Bin Ke

Bin Ke

National University of Singapore

Lanfang Wang

Shanghai University of Finance and Economics - Institute of Accounting and Finance

Date Written: January 17, 2019

Abstract

We examine the impact of mixed ownership on the performance of venture capital (VC) firms in China. We use successful/unsuccessful exits from VC-financed entrepreneurial companies and number of patent applications by VC-financed companies as proxies for VC firms’ performance. Consistent with existing research on the inferior performance of SOEs relative to non-SOEs, we find that on average government-controlled VC firms (GVCs) underperform domestic private investors-controlled VC firms (PVCs). More importantly, we find that introducing minority private investors (i.e., mixed ownership) helps improve the performance of GVCs. However, we find no evidence that introducing minority government investors (i.e., mixed ownership) helps improve the performance of PVCs. Our results provide relevant information to the ongoing debate on the role of the government investors and private investors in developing the VC industry in emerging markets.

Keywords: venture capital; emerging market; China; government ownership; performance; innovation

JEL Classification: G24, G38, O31

Suggested Citation

Ke, Bin and Wang, Lanfang, Mixed Ownership and Firm Performance: Evidence from the Chinese Venture Capital Industry (January 17, 2019). Available at SSRN: https://ssrn.com/abstract=2606689 or http://dx.doi.org/10.2139/ssrn.2606689

Bin Ke (Contact Author)

National University of Singapore ( email )

Mochtar Riady Building, BIZ 1, #07-54
15 Kent Ridge Drive
Singapore, 119245
Singapore
+6566013133 (Phone)

Lanfang Wang

Shanghai University of Finance and Economics - Institute of Accounting and Finance ( email )

Shanghai, 200433
China

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