Comparative Study Of Company’s Financing Efficiency Before And After Listed On Chinese GEM

Funds are the "blood" of corporate operation, with the role of guiding and configuringthe other resources.And the financing selection issue becomes the very first thing thatenterprises have to deal with during their normal production and operation.However, theshortage of funds and difficulties in financing have been the crucial factors to hinder thegrowth of small and medium-sized high-tech enterprises. In order to solve these company’sproblems in financing, Chinese Growth Enterprise Market officially open board on October23rd in2009, which provides a direct financing channel for small and medium-sizedhigh-tech enterprises. As the financing issue has already been resolved, now the issue offinancing efficiency, allocative efficiency of funds as well as the financing efficiency of theoverall Growth Enterprise Market become the focus of our attention.This article made the combination of theoretical approaches and empirical methods,comparatively analysing the financing efficiency of the companies listed on Chinese GEMMarket before and after their IPO on GEM. Firstly, the paper analyzed the theory of financeefficiency and built a financing efficiency evaluation index system of Chinese GEM listedcompanies concerning timeliness of funds, financing costs, enterprise value, anti-risk ability, capitalstructure and ownership structure these six aspects. Then an empirical analysis about the GEM listedcompanies’ financing efficiency was carried out by a method combination of principal componentanalysis and information entropy.It concluded that the GEM improved the financing efficiency ofthe GEM listed companies to some extent, but as a whole the financing of the GEM is still notefficient enough. Finally, supporting by the results of empirical analysis, this paper analyzed thefactors which caused low financing efficiency of overall GEM, and made some suggestions of howto improve the financing efficiency of listed companies on Chinese GEM market. Nowadays, as thetheory system of socialist market economy is supposed to be further completed and capital market issupposed to be developed thoroughly. Therefore, this article is of instructive significance especiallyat this moment when Chinese GEM has just been established for one year.