Innovation-Supporting Effect of Government Versus Private Venture Capital: Evidence from Chinese Listed Companies

Venture capital (VC) can promote the innovation of invested enterprises through financial support, social networking, and intellectual capital. Based on data of Chinese listed companies from 2003 to 2016, this study, firstly, compares the impact of government and private VC on enterprise innovation using Possion regression, and applies the ITCV method and Negative Binomial Regression for Robustness Examination, then, explores the relationship between their shareholding percentage and enterprise innovation with threshold test. The results show that: the performance of private VC is significantly positive and in line. With the increasing shareholding percentage of private VC, the innovation of invested enterprises increases. The overall performance of government VC, however, is not significant, and the shareholding percentage of government VC also has no significant impact on the innovation of invested companies. Additional testing revealed that a “threshold effect” however exists in the impact of the shareholding percentage of government VC on innovation: within a certain range, the higher the shareholding percentage, the more significant the impact on innovations becomes, but beyond that range, the percentage is inversely related to innovation.