Abstract:     In the face of the COVID-19 pandemic, frequent natural disasters, and energy scarcity, countries worldwide have redirected their investment and business development efforts from traditional economic value creation to the pursuit of social and environmental value creation. By examining the post-investment management behavior of venture capital, valuable insights can be gained. Therefore, this study focused on investigating the impact of venture capital on corporate sustainable development capabilities. Specifically, we analyzed the behavior of venture capital investors after making investments and its subsequent influence on sustainable development. A dataset of all A-share listed companies from 2009 to 2020 served as our research basis, with an aim to illuminate the effect of venture capital on corporate sustainability and unravel underlying mechanisms. The findings of our study are as follows: firstly, venture capital significantly contributes to the promotion of corporate sustainable development. Secondly, our mechanism analysis revealed that venture capital affects corporate sustainable development through two key channels. It helps alleviate financing constraints that companies may face, enabling them to invest in sustainable initiatives. Additionally, venture capital acts as a check against management short-sightedness, ensuring a long-term perspective in decision-making processes. Furthermore, our research indicated that venture capital with government backgrounds and long-term shareholding exhibits a stronger effect. Moreover, in regions with lower institutional development and in companies with smaller board sizes, the positive influence of venture capital becomes even more significant. This study made significant theoretical contributions in the following aspects: Firstly, it has broadened the research on post-investment governance of venture capital from the perspective of corporate sustainable development. While there is an abundance of existing research on the impact of venture capital on companies, most of them focus on market economic effects or internal governance within companies. There is a lack of research on the mechanisms and effects of venture capital on corporate sustainable development. This study aims to clarify the relationship between venture capital and corporate sustainable development capabilities, elucidating the underlying mechanisms. This study elucidated this relationship, offering novel insight into the post-investment governance of venture capital and providing fresh evidence for the ongoing theoretical debate around venture capital′s “arbitrage-seeking” and “certification supervision”. Secondly, it has enriched the research on the factors influencing corporate sustainable development capabilities. Both domestic and international research primarily focuses on evaluating the economic effects of sustainable development, with limited attention given to the factors influencing corporate sustainable development capabilities. This study went beyond the existing literature by expanding the perspective from economic consequences to guiding corporate sustainable development. Thirdly, this paper has also revealed the paths through which venture capital holdings influence corporate sustainable development. This study conducted an in-depth analysis of the mechanisms through which venture capital affects corporate sustainable development capabilities. By doing so, it clarified the channels of post-investment governance effects of venture capital, and identified the mechanisms and limitations of the impact of venture capital on corporate sustainable development. These findings will contribute to the establishment of a sound capital market system and the promotion of high-quality development among listed companies.

Key words: venture capital, sustainable development capacity, ESG, corporate governance