The Study On Financial Governance Efficiency Of China’s GEM Listed Companies

GEM (growth enterprise market) listed on October23,2009is a special sectionof China’s capital market in order to solve the financing problems of small andmedium-sized high-tech enterprises. By the end of year2012, there are already355companies listed on GEM, accounting for23.05%of the total number of listedcompanies in the Shenzhen Stock Exchange. GEM market in China has shown greatgrowth advantage. However, companies listed on GEM are almost in the initial stageof the enterprises and have not been effectively standardized so that there are moreunsolved problems in the aspects of corporate governance and financial governance.So it has a strong practical significance for the study of companies listed on GEM.At the same time, with the rise of corporate governance research, financialgovernance also attracted the attention of many scholars. The efficiency of financialgovernance is a fundamental objective of financial governance. The financialgovernance theory can’t be mature without the in-depth study on the efficiency offinancial governance. In order to ensure that the GEM market keeps high-speedoperation, efficiency must be in the first place. So any system, including the design ofthe company’s financial governance structure can’t be separated from the efficiencyand should serve for the improvement of the efficiency.Financial governance structure is the key to improve financial governanceefficiency. Financial governance structure is a set of institutional arrangements onhow to allocate property rights. It can be divided into micro-level financial capitalstructure and macro-level financial organizational structure. T his paper studies theGEM listed companies’ characteristics of the financial governance structure and theefficiency of the financial governance caused by financial governance structure fromtwo angles which are financial capital structure and financial governance structure.On the basis of theoretical analysis we build an empirical model. By selecting2010-2012data of the GEM listed companies from the CSMAR database we usedSPSS statistical software to do descriptive statistics and regression analysis. Thestudy found that Chinese companies listed on GEM, low debt ratio, low ownershipconcentration, high equity balance degree and effective audit committee ha ve a goodnegative impact on financial governance efficiency, and state-owned shares canimprove the efficiency of financial governance to a lesser extent. On the other handthe long-term debt and the industriousness of the board of directors and supervisors don’t have an obvious effect on the efficiency of financial governance. Finally, weproposed some suggestions to improve financial governance structure: improve theownership structure of the familial company in order to improve decision-makingefficiency; use reasonable debt management to improve the efficiency of ultra-raisedfunds; create a good financial governance structure environment to promote theefficiency growth of GEM listed companies etc.