Corporate Governance, Stock Market and VC
Fei Wei
【全文】
Corporate Governanc/Securities Markets & Venture Capital
I. Introduction
Venture capital industry has been remaining a hot topic in recent years. Compared with other countries, the US has a more developed venture capital industry and, it has been considered that venture capital industry offered crucial contribution to the business success of the high-technology companies of the US. Many countries have tried to copy such success. Obviously, very few of them saw the same success as in the US. What can be the explanation of their frustration? This paper will describe the relationship between corporate governance, security market and venture capital to find an answer.
The United States has comparatively small banks that play a limited role in the governance of large corporations, and a well developed stock market with frequent initial public offerings (IPOs). In contrast, in other countries, mainly European continental countries and Japan, main banks are larger in size relative to the firms, and play a larger role in monitoring large firms. Such countries have no active IPO markets.
This paper will try to find what is behind the existence of a much stronger venture capital industry in stock market-centered systems. We define 搗enture capital ( VC )?as investment by specialized organizations (搗enture capital funds? in high-growth, high-risk, often high-technology firms that need equity capital to finance product development or growth. Other financing forms, even in the name of 搗enture capital? will not be covered by this paper.
The conclusion is, a well developed stock market that permits venture capitalists to exit through an initial public offering (IPO) is critical to the existence of a vibrant venture capital market. If a country is in lack of such a mechanism, an alternative way is to take advantage of other countries''s mechanism, such as the stock market of the US.
