A Study On The Cost Of Capital Effect Of IPOs Of Chinese GEM Companies

China has become the biggest IPO market in the world, and it is also becoming a nation with powerful finance. Now our country is at the "emerging and switch" stage,and it needs the theory and the empirical research of the multi-level capital market construction urgently. The scientific limits and the measure of the concept of the cost of equity play a very important role in the decision-making of business finance. This article discusses the ChiNext IPO Corporation's cost effect thoroughly from the fundamental research and the empirical research. IPO causes the undertaking enterprises to transform from the private companies into the public companies, and it also makes obviously changes at the corporate governance. Therefore, this research launches according to the below mentality:Under the supposition of the effective capital market, the enterprises'IPO behavior changes the corporates'capital structure. And the capital structure plays a positive role in the corporate governance. It will improve the corporate governance at the operator inspiring, the information disclosure and the investor protection and so on. It will reduce the companies'cost of equity.Then it will realize the the maximized value of the company (or shareholder wealth).ChiNext has listed companies for one year. With these data, the article researches the influence of IPO to the listed companies'cost of equity. In order to achieve the above research aims, this article makes a system research from the introduction, the literature summarized, the frame construction of the theoretical analysis, the choice of the estimating method of the cost of equity, the evidence, the research conclusion. And, the hard core is the fourth chapter and the sixth chapter:The fourth part is about the relationship between IPO and the cost of equity. It attempts to construct the theoretical model and the evidence of "IPO- cost of equity relations". Its key is to outline the inner link among IPO, the corporate governance and the cost of equity; The sixth part is the empirical research. It estimates the ChiNext'cost of equity and compares the changes after IPO occurs, then confirms the feasibility of "the theoretical model of IPO-- Corporation value" in this research.The innovation of this article is mainly in two aspects. On the one hand it proposes the theoretical model of "IPO- cost of equity relations"; On the other hand it proves by evedence that the cost of equity of he majority of Growth Enterprise Board Companies reduces and the cost of equity changes much after IPO. At the same time, this research also draws the following several conclusions:(1)As a whole, IPO reduces the cost of equity of our Growth Enterprise Board listed companies; (2) under the supposition of the effective capital market, the enterprises'IPO behavior changes the corporate capital structure,and the capital structure improves the corporate governance,then lowers the level of the cost of equity; (3) From the theoretical model " IPO-cost of equity relations" in this article, it indicates that the company value is the increasing function of the consummation degree of the corporate governance; (4) The undertaking enterprises'IPO behavior plays the positive role in the corporate governance. Namely, the operator inspiring, the information disclosure and the investor protection has the distinct improvement. This article also has the deficiency which waits for further discussing. This article mainly examines the relationship among IPO, the corporate governance and the cost of equity, but has not been able to integrate the operator inspiring, the information disclosure and the investor protection into the theory of the cost equity, to infer the new measure model. This needs further study in the future fundamental research. In addition, in this article, the discussion and the estimating about the cost of equity of private solicits is also at the quite rough stage. The author believes that the research about the relationship between private solicit equity and the cost of equity will be one of the the challenging and urgent directions in the future.