The IPO Effect Research Of Companies Listed On GEM And Its Influencing Factors

With the rapid development of technology and economy in China, a large amount of high technology enterprises spring up. In order to satisfy the needs of entrepreneurship and innovation, the GEM (Growth Enterprise market) has established in October,2009after ten year’s preparation. Thereafter, more and more medium-sized and high-tech enterprises have enriched their financing channels, and they get a powerful financial support. Thus, the GEM has attracted many investors and get great expectations. However, to our surprise, a large number of companies’performance "suddenly turn hostile" after a short while, and most companies’ business performances declined after IPO. Through a large number of research by scholars both home and abroad, they have found a phenomenon that most listed companies’business performances decline after IPO, and they define it as the IPO effect. Since the GEM is an important part of the capital market and the IPO effect will have negative influence on the stability of the market, studies on the IPO effect in the GEM and analyze its influencing factors is of great significance.This paper selects the153companies listed on the GEM from2009to2010as samples, and testifies the IPO effect from four aspects, including debt paying ability, profit ability, operation ability and growth ability. Then it analyzes its influencing factors from the perspective of corporate governance. Finally, it puts up some relative suggestions based on the results and combined with the reality background of our nation. This paper consists of six parts, specifically, the main contents of each part are as follows:Chapter one is introduction, it discusses the background and significance, research method, main contribution and insufficiency of this study.Chapter two is a review of literature. After many researches, scholars have found that the IPO effect exists comprehensively in the capital market both home and abroad. Since the GEM has set up recently, its study is still in its infancy. Therefore, this paper not only can enrich previous works, but also can lay a foundation for lately works.Chapter three is theory analysis of IPO effect, in which theoretical explanations have been discussed, such as earning management, time operation, and agency cost. It also analyzes recent situation of the GEM and its significance.Chapter four is test of IPO effect existence. It selects the153companies listed from2009to2010on the GEM as samples, to testify the IPO effect from four aspects, including debt paying ability, profit ability, operation ability and growth ability. Firstly, it observes if there is a declining trend for the data, and then tests if this change is significant through empirical approach, including Wilcoxon signed rank test and T test. Result shows that besides the debt paying ability, the other three aspects all verify the existence of IPO effect on the GEM.Chapter five is empirical analysis of influencing factors from the perspective of corporate governance. This paper chooses ROE as explained variable, five aspects of corporate governance as explanatory variables, including ownership concentration, proportion of independent directors, proportion of state-owned shares, proportion of social legal person shares, and if the board of directors is holding concurrent post of general manager. Besides, it also chooses assets, asset-liability ratio, and growth ability before IPO as control variables. The results show that besides proportion of independent directors and if the board of directors is holding concurrent post of general manager, others variables are all influencing the change of ROE. Then it gives an explanation to the results.Chapter six is conclusion part. Based on the previous parts and research results, it gives a conclusion for this paper and puts forward related suggestions.This paper mainly has the three contributions. Firstly, since the GEM set up in2009, there are not many studies about its IPO effect so far, this paper not only can enrich the previous works, but also can lay a foundation for the lately works. Secondly, this paper is base on five years’data of samples, and its results can truly reflect the business performance of the listed companies on the GEM. Thus, the results are reliable. Thirdly, based on the empirical research, this paper puts forward some feasible suggestions, which are of practical significance.This paper also has some disadvantages. The first is that samples of research are limited since the GEM has set up for only five years. The second is that this paper mainly studies from the perspective of corporate governance to analyze the influencing factors. However, there are many other factors will also influence the IPO effect, such as GDP. More research can be done on what are the main influencing factors of the IPO effect in the future.