Research On The Information Transparency Of Chinese GEM Companies

The first batch of 28 GEM companies on behalf of the Chinese economy innovative activity listed on October 30, 2009, marking the beginning of GEM companies listed in Chinese market and a new milestone in the China's securities industry history. Among all the problems in the opening and development of GEM, the most important issue is the information transparency and disclosure system of the listed GEM companies, because it is crucial for the health operation of the GEM. As an emerging market in China, which developed from the motherboard market, it is impossible for GEM to cut off all the connections with the main board. In particular, there are still problems about the information transparency and disclosure system of the main board listed companies, which seriously affects the efficiency of motherboard market, and to some extent, it inevitably affects the development of GEM. Thus, not only does it protect the investors from suffering from the asymmetric information, but also it helps to achieve the requirements of efficiency and equity in the capital markets and sustainable development of GEM in China.This paper mainly focuses on the information transparency of listed GEM companies. Firstly, it discusses the theory aspect based on the research studies at home and abroad. Then, by comparing the domestic with international market development of GEM, some revelation can be derived based on the background of China. Finally, the impact factors of the information transparency of Chinese GEM listed companies can be found through the empirical analysis. It also finds that the information transparency of different firms have different effects on the transaction decisions of investors. Therefore, it provides both theoretical and empirical evidences for the goal of building a perfect information disclosure system and standard capital markets. From the empirical evidence, the two main factors are the operating profit margin and the main business revenue growth ratio, which represent the profitability and growth capability of a firm, respectively. As for the effects on the decision-making on investors, there are significant diversities in the relative bid-ask spread and volatility of stock returns. In summary, some political suggestions are proposed based on the previous analysis, which include making the behavior of GEM listed companies normative, strengthening the responsibility of sponsors in charge of the accounting information and ensuring the regulatory functions of the market regulatory authorities.