Financial Market Sustainability in a Dual-Track System: Venture Capital and Startups’ Speed of Passing

Sunyang Hu (), Yichen Jiang () and Xianlong Wang
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Sunyang Hu: Business School, Nankai University, Tianjin 300071, China
Yichen Jiang: Zhejiang Science and Technology Information Research Institute, Hangzhou 310006, China
Xianlong Wang: School of Economics and Management, Hebei University of Technology, Tianjin 300401, China

Sustainability, 2023, vol. 15, issue 14, 1-23

Abstract: The government’s intervention under the approval system seriously affects the healthy and sustainable development of the financial market. An IPO is an important way for a venture capitalist (VC) to gain income, which impacts the efficiency of resource allocation in the capital market. From the perspective of resource allocation efficiency, this paper compares the influence of venture capital on the IPO process of startup enterprises under registration and approval systems. The findings are as follows: (1) after the trial registration system, the speed of passing and listing of VC-owned startup enterprises can be significantly accelerated. (2) Venture capitalists can accelerate the startup enterprises’ speed of passing by sending directors to startup enterprises and improving the level of risk disclosure, which is only significant under the registration and issuance system. (3) Further research shows that VC-supported startups perform better after listing. (4) VCs can help startup enterprises to choose hot season listing, which has a good timing effect. The conclusion of this text study is still robust after using propensity score matching (PSM) and Heckman to eliminate endogeneity. The conclusion of this study provides a theoretical basis and empirical support for emerging market countries to promote market-oriented reform.

Keywords: registration system; approval system; venture capital; financial market sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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