Gem Listed Company Raised The Economic Consequences Of Empirical Research

Ever since Oct. 30, 2009 when the Growth Enterprises Market was put into practice in Shenzhen Stock Exchange, 153 listed companies had financed through it by the end of 2010. Because of its prevalence in the market and the high issue prices, over-financing has practically become an alternative name for the Growth Enterprises Market. Attentions have therefore been drawn to those stock markets, listed companies and the investors. Over-financing may also pain the stock market's function of resource optimization and cause resource waste and bubbles in the stock market. What's worse, those unused dollars might even be embezzled, which could easily degrade the company's ability to profit, lead to reduction in the sales volume and result in disturbance to the allocation of resources. Defying the investors'intention in the first place, over-financing could as well spoil the benefits of the creditors and minor shareholders. The confidence and enthusiasm of the investors subsides and the profits of the listed companies will therefore be affected eventually.Backed by the general theories of capital structure and financing, this thesis adopts a large collection of relative literature. It discusses the present status, the harmfulness, and the reasons of over-financing by using qualitative analysis, and on the other hand, it attempts to reach a descriptive statistic result of over-financing amount and rate by means of calculation and analysis. Then, based on the previous efforts, the thesis puts forwards a hypothesis, discusses the financial consequences of over-financing in two aspects: sales volume and stock price, and testifies that over-financing has brought huge negative effects to the listed companies and the investors. Reasons for those effects, as summarized in the thesis, lie mainly in the low efficiency of capital usage and investment. Finally, it foresees the general blueprint of over-financing in Growth Enterprises Market within our country and gives practical suggestions on the prevention of over-financing.