Using Chinese firms listed globally from 2000 to 2015 as a sample, this paper examines the impact of FVC on firm internationalization, and whether the impact is related to the process of listing and the location of listing. Our results show that, compared with domestic venture capital（DVC）, FVC significantly improves the possibility of overseas listing, which is more pronounced before the opening of the domestic Growth Enterprises Market Board. Firm internationalization is the main channel for FVC to affect overseas listing. FVC accelerates firm internationalization to achieve the exit goal of overseas listing. However, the positive impact of FVC on firm internationalization is not sustainable, and the impact reaches the highest when it comes to the listing year, and has a negative impact after successful listing. This relationship is especially manifested in overseas listed firms. These findings suggest that compared with firm internationalization, FVC pays more attention to overseas listing. The internationalization process promoted by FVC is opportunistic internationalization for the purpose of overseas listing, but not strategic internationalization. Our paper reveals the dynamic impact of FVC on firm internationalization. Previous literature holds that FVC plays a significant positive role in promoting firm internationalization. Contrary to popular belief, our paper finds that the impact of FVC on firm internationalization is closely related to the process of firm overseas listing, which shows that the impact of FVC on firm internationalization is dynamic. Also, our paper explores the main influencing factors of Chinese firms’ overseas listing. The motivation of firm overseas listing is controversial in theory. Our results show that there is an alternative relationship between overseas listing and domestic listing, and overseas listing has no significant effect in promoting firm internationalization. We can conclude that compared with the “internationalization hypothesis” and the “corporate governance hypothesis”, the “financing hypothesis” and the “private benefits hypothesis” can better explain the motivation of Chinese firms’ overseas listing. Lastly, our paper demonstrates the role of VC when firms choose the listing location and timing. By accelerating firm internationalization, FVC realizes the purpose of rapid exit by overseas listing.
Foreign Venture Capital, Overseas Listing and Firm Internationalization
Foreign Economics & Management Vol. 42, Issue 04, pp. 123 - 138 (2020) DOI:10.16538/j.cnki.fem.20200110.001
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Cite this article
Peng Tao, Huang Fuguang, Li Ya, et al. Foreign Venture Capital, Overseas Listing and Firm Internationalization[J]. Foreign Economics & Management, 2020, 42(4): 123-138.