A Study On The Relationship Between The IPO Over-financing And Enterprise Performance Of The GEM

When the Growth Enterprise Market(GEM) was established in2009,Thephenomenon of over-financing had draw widespread attention from all works oflife.The original intention of GEM’s establishment is to offer the financing channelfor those companies,which have the features of high-growth and innovation,then toassist these companies to have a better development.However the high over-financingphenomenon had an extremely negative effect on the listed companies’performance,which mainly reflected in the lower utilization efficiency of over raisedfunds or the excessive investment for over raised funds arose by over-financing.So itsignificantly against the original intention.While after five years ofdevelopment,The annual reports disclosed by the GEM’s listed companies hadrevealed the decline trend of operating performance, and their operating performancewere far behind than financing situation.Finally this thesis had used empirical analysisto study the effects of this high excessively raising funds phenomenon to the GEM’slisted companies’performance.This thesis’s research starting point was to made a literature review on thecurrent study situation of domestic and overseas.the related study mainly includedIPO pricing,the effect of over-financing,the use of IPO over raised funds, therelationship between IPO over-financing and enterprise performance.Then introducedthe conception of over-financing and enterprise performance,the related theoreticalbasis of asymmetric information theory and principal-agent theory.the aboveintroduction were essential for the following thesis writing.One important part of this thesis was to introduce the present situation of IPOover-financing in the Growth Enterprise Market.it firstly presented the whole currentsituation of IPO over-financing,and it had a detail intruoduction of over raised fundswhich depend on differennt industry and different method of funds utilization. Whenanalyzed the current utilization situation of over funds,the GEM’s listed companiestended to invest on the following five aspects:new projects,equity investment,boughtproperties,repaid the loan and deposited in the banks.In the mean time,the researchhad found that the reasons for the phenomenon of GEM’s IPO over financing mainlygeneralized the following points:macroeconomic, market mechanism and marketparticipants.The negative effects of over raised funds could be harmful for enterprisefuture development,damage the interest of investors and intensify the phenomenon of capital markets speculation.Another important part of this thesis ws to use empirical analysis to study theeffects of over financing to the GEM’s listed companies’ performance.The thesischose153companies which listed in the Growth Enterprise Market from2009to2010as the research object.Return on Assets(ROA) and Abnormal Return(CAR),thesetwo indicators represented the effects of over financing to the GEM’s listedcompanies’ performance. The empirical results from this research have verified thenegative correlation between over financing and ROA,and the negative correlationbetween over financing and CAR which presented the listed company’s stock priceperformance in the capital market.So in the section5,the thesis put forward a series ofsuggestion about how to deal with the phenomenon of over financing,then it weremainly based on the listed company itself,GEM’s market mechanism and marketsupervision.Through the above measures, it could realize the function of optimizingthe allocation of society resources in the Growth Enterprise Market.