Study On Quality Of Companies Listed On Growth Enterprise Market Assessment System

Overseas, the Growth Enterprise Market shows astonishing creativity in promoting SME financing and supporting the development of high-tech enterprises. China has made the idea of setting up GEM as early as 1998, however, China's GEM Board did not officially open until October 2009 in Shenzhen Stock Exchange. So far 193 public companies have been listed on the GEM Board. Its vigorous development makes clear that China's construction of multi-level capital market has entered a new stage. However, in this young market, due to the appropriate management and supervision system are imperfect, the GEM is also facing many challenges, for example how to accurately evaluate the quality of listed companies. With this guiding principle and in-depth understanding of the characteristics of GEM listed companies, this article establishes a new quality evaluation system of listed companies on GEM which is based on the quality assessment methods used in assessing listed company on mature Main Board after consulting many correlative materials.First, the paper analyses the Growth Enterprise Market, the characteristics of companies listed on GEM, the meaning of quality of companies listed on GEM and the meaning and significance of these companies'quality evaluation. With above analysis the paper draws a conclusion that the evaluation of companies listed on GEM Board is different from the mature Main Board listed companies assessing, however, the quality of listed companies on GEM is not simply the financial conditions. The quality of these companies should include three aspects, the company's financial results (defined as the basis of growth in this paper), the company's growth potential and the room for company's growth. These three aspects should be evaluated separately on evaluating the quality of Companies listed on GEM, and then make the overall judging.Then this paper reviews the relevant theories of the quality evaluation of the listed company, including Enterprise Growth Theory, Corporate Life Cycle Theory, System Management Theory and the principle of AHP. These theories and methods are providing guidance in evaluation of listed companies. Enterprise Growth Theory explains the dynamic business growth, Life Cycle Theory outlines an enterprise's development process from its start to decline, System Management Theory reveals the variability and the importance of management and AHP is the main method of building model in this article.Next the paper determines the principles to build evaluation model and breaks down the three evaluation indexes of evaluating the quality of the Listed Companies into 19 evaluation indexes, including 11 quantitative indexes and 7 qualitative indexes, and for each index there has been an explanation, which describes the correlation between the indexes and the company quality. Used the AHP method the paper constructs a compared matrix, which has determined the weight value of each index. Therefore this paper has established a quality evaluation system of listed companies.Finally, this paper selects five representative companies among the listed companies on GEM for empirical analysis and assesses them separately using the built model. The model's practical and scientific have been tested by comparing the results and the actual situation. At last, the paper does a retrospective on the whole article, points out possible shortcomings and innovation.