A co-authored paper by Researcher Ao Li (first author) from the base, together with Professor Yue Pan from Xiamen University, Professor Gary Gang Tian from Macquarie University, and Associate Professor Pengdong Zhang from Sun Yat-sen University, titled "Lost in the Noise: How IPO Suspensions Distract Venture Capitalists From Monitoring Portfolio Firms", has been published in the Journal of Business Finance & Accounting. This journal is recognized as an A‑level journal by the finance discipline of Zhongnan University of Economics and Law.

The Journal of Business Finance & Accounting (JBFA) is an internationally renowned journal in the interdisciplinary field of corporate finance and accounting. Founded in 1974 and published by John Wiley & Sons, it is currently co‑edited by Professor Peter F. Pope of the London School of Economics and Political Science and Professor Andrew Stark of the Alliance Manchester Business School. The journal focuses on information issues and the role of accounting in financial markets and business organisations, covering topics such as financial reporting, valuation, performance measurement, incentives and control, and welcomes both theoretical and empirical research. It is indexed in major international databases including SSCI and Scopus, and enjoys broad influence in both academia and practice.

Content Summary

Venture capital (VC) is a critical source of capital for promoting innovation and entrepreneurship, and its function of providing value‑added services to portfolio firms through post‑investment management has been widely recognized. The distinctiveness of VC lies not only in its role as a vital source of equity capital for entrepreneurial firms, but also in its deep involvement in corporate governance through appointing board directors, participating in major decisions, and offering strategic advice, thereby playing an important role in mitigating agency problems and constraining insider opportunism. However, existing studies have largely focused on VC's monitoring role prior to the IPO; there is still insufficient theoretical and empirical evidence on whether VC continues to play a governance role after the firm goes public, especially whether it can effectively curb the expropriation of minority shareholders by controlling shareholders. The above characteristics make the importance of VC's post‑IPO monitoring particularly salient in the Chinese context—Chinese listed companies have highly concentrated ownership, and investor protection institutions are still underdeveloped, making tunneling activities by controlling shareholders through related‑party transactions and fund embezzlement relatively common. At the same time, Chinese VCs often retain a significant equity stake after the IPO, and their lock‑up periods are much longer than those in developed markets, which gives VCs both the incentive and the capacity to engage in ongoing monitoring. Therefore, exploring whether VC can continue to exert governance functions after the IPO is of great significance for understanding the micro‑level governance mechanisms of capital markets in emerging economies.

This study exploits three IPO suspension episodes in China's capital market as quasi‑natural experiments to identify the causal effect of VC post‑investment monitoring on corporate governance. We find that the IPO suspension shock significantly exacerbates controlling shareholder tunneling in VC‑backed portfolio firms that have already gone public. Specifically, IPO suspensions increase the ratio of other receivables from related parties to total assets by about 0.5 percentage points, and raise the probability of regulatory penalties against controlling shareholders for fund embezzlement by about 11.4 percentage points. Mechanism analyses reveal that during IPO suspensions, VC involvement in monitoring their publicly listed portfolio firms declines substantially, as evidenced by a lower frequency of temporary board meetings and a higher proportion of proxy voting by VC‑appointed directors. Interviews and surveys with VCs further confirm that during suspension periods, VCs devote considerable effort to assisting distressed pre‑IPO firms in weathering difficulties, thereby crowding out attention to their other portfolio firms. These effects are more pronounced when VCs face stronger attention constraints, when VC monitoring is expected to be more effective, and when controlling shareholders have stronger tunneling incentives, but they are mitigated in the presence of alternative governance mechanisms such as analyst coverage, high‑quality auditing, and sound regional legal environments. After ruling out competing explanations, we find that our results are not driven by collusion between VCs and controlling shareholders, nor by reduced industry competition pressure due to IPO suspensions. Moreover, once the IPO suspensions end, VCs' monitoring attention recovers, and tunneling behavior declines significantly accordingly.

The contributions of this study are threefold. First, by exploiting the unique IPO suspension policy in China as an exogenous shock, we identify the causal effect of VC post‑investment monitoring on controlling shareholder tunneling from the perspective of attention constraints, thereby providing a novel identification strategy and empirical evidence for understanding the role of VC in corporate governance. Second, we extend the analysis of VC monitoring behavior from the pre‑IPO to the post‑IPO stage, revealing the mechanisms and conditions under which VCs continue to play a significant governance role in listed firms. Third, we focus on the agency conflicts between large and minority shareholders in the context of concentrated ownership and weak investor protection in emerging markets, and examine the governance boundaries of external mechanisms such as analysts, auditors, and legal institutions from the perspective of governance substitution, offering new evidence on the substitution and complementarity among different governance mechanisms.

Author Introduction

Ao Li is a Master's Supervisor whose research interests include corporate finance, corporate governance, innovation, and green finance. He received his bachelor's degree in Accounting (ACCA program) from Huazhong University of Science and Technology, his master's degree from the University of Sheffield, and his Ph.D. from Xiamen University. He has published papers in journals such as World Economy, Journal of Management Sciences in China, China Population, Resources and Environment, Journal of Business Finance and Accounting, Energy Economics, Environmental Impact Assessment Review, and Research in International Business and Finance. He has led NSFC Youth and Hubei Provincial Natural Science Foundation projects, and participated in NSFC Major and Excellent Young Scholars projects. His policy advisory reports have been adopted by multiple central and provincial government bodies. He also serves as a procurement review expert for the Ministry of Education's system and a dissertation reviewer for the Ministry's Degree Center, and is a member of the ACCA.

Yue Pan is a Professor of Finance at the School of Economics, Xiamen University, where she also serves as the Director of the Social Science Research Administration Office and the Director of the Center for Arts and Humanities Journals; she is a specially appointed supervisor of the second term of the National Commission of Supervision, a Certified Public Accountant in China, and a former visiting scholar at the Department of Economics, Cornell University. She has been honored with multiple national talent titles, including Leading Talent under the National Major Talent Project, Young Top-Notch Talent, and New Century Excellent Talent of the Ministry of Education, and has received numerous prestigious awards such as the National March 8th Red-Banner Pacesetter, Leading Talent of Higher Education Institutions in Fujian Province, Excellent Teacher of Fujian Province, and the Fujian Youth May Fourth Medal. Her research interests lie in corporate finance, corporate governance, and capital markets, and she has published over 70 papers in leading domestic and international journals including Economic Research Journal, Management World, Management Science, Journal of Accounting and Economics, and Journal of Banking & Finance. She has consecutively served as principal investigator for major and key projects of the National Social Science Fund of China as well as general projects of the National Natural Science Foundation of China, and her research achievements have been repeatedly awarded with Outstanding Social Science Achievement Prizes from both the Ministry of Education and provincial governments.

Gary Gang Tian is a Professor of Finance in the Department of Applied Finance at Macquarie University, Australia, where he also supervises doctoral students. His research interests centre on corporate finance and corporate governance, with a particular focus on China's capital markets, including ESG and business ethics, political connections, social identity in finance, CEO compensation, bank loans and informal finance, innovation, and investment efficiency. He has published nearly 100 papers in leading international journals such as Management Science, Journal of Financial and Quantitative Analysis, Review of Accounting Studies, Journal of Management Studies, and Journal of Business Ethics, including multiple Web of Science highly cited papers (top 1%). His academic impact is substantial, with a Google Scholar h‑index of 47 and over 9,000 citations, and a Scopus h‑index of 34. He has received recognition in several major international research rankings, including Handelsblatt, ERIM, ABDC, CABS, and VHB, and in 2025 was ranked by ScholarGPS among the top 0.18% of scholars worldwide based on five‑year research performance.

Pengdong Zhang is an Associate Professor and doctoral supervisor at the School of Management, Sun Yat-sen University, and holds professional credentials as a Certified Public Accountant in China and a Chartered Financial Analyst. His research focuses on information disclosure and auditing, with publications in leading domestic and international journals including Journal of Accounting and Economics, Journal of Corporate Finance, Journal of Business Finance & Accounting, The British Accounting Review, Journal of Economic Behavior & Organization, Economic Research Journal, Accounting Research, Journal of Financial Research, China Industrial Economics, and Journal of Management Sciences in China. He has served as principal investigator for several research grants, including General and Youth projects funded by the National Natural Science Foundation of China, and regularly acts as a reviewer for journals such as Journal of Accounting and Economics, Contemporary Accounting Research, and Research Policy.