The Research On The Change Of Performance Of Companies Listed On GEM Before And After IPO

October 30,2009, China's first batch of 28 stocks began to exchange in GEM(Growth Enterprise Market), it means the work of 10-year-long preparation for the GEM is finished. As a specialized financing platform for small company,GEM is payed close attention by investors and academics since it began. But when the domestic scholars researched the performance of company changes before and after IPO,most of they just focused on the motherboard and the small board. Shu Lin and Wei Ming Hai, Zhang Fan,and other scholars found most company in the main board market in China showed a worth performance after they IPO. Chen Wenbin, and Chen Chao, Yuan Lite, Qiong and Li Cuimei researched China's A share market, then they found some Problem just like Slow investment, Investment Changes and so on in it.Since the establishment of GEM in china is not long, most of the current research is focused on high PE, high price and ultra financing.there are also some scholars made his own recommendations and views to improve the regulatory system of the GEM. And some scholars have they own views on supervision of the GEM system.But few research is focused on the performance of company changes before and after IPO, while the author believes that only research the performance of the company in GEM before and after the IPO can only measure the GEM in china."IPO effect" refers to the list company's performance having any significant downturn after their IPO. Many scholars found that "IPO effect" exists in a wide range of motherboards and small board. But did the "IPO effect" exist in the GEM? In order to find out it, the author decided to research the 36 company'performance which was Listing in the GEM in 2009 by using some financial indicators.the indicators can show three areas of the company:the ROE and cost to income ratio can reflect the profitability of the company. the main business revenue growth and net profit growth can reflect the ability of growth of the company, and finally,current ratio can reflect the short-term solvency of the company.When conducting empirical, author used median of the indicators to describe statistics first. and then applied the Wilcoxon signed rank test on testing significant level of these indicators, eventually found that the 36 GEM companies in the IPO before the 2 years to IPO after 1 year of 4 years, profitability and growth ability had a significant decline, while the current ratio in the IPO year showed remarkable rise,and in one year after IPO, the current ratio showed a significant decline, but still much higher than the traditional view about the reasonable value of production-oriented company,and also much higher than the level prior to the listing of these company themselves. Changes in these indicators reflect the performance of these company generally changing to worse while the current ratio had greatly increased. All of these turn shows that capital in these company had not been well used, the progress that the money using to production is very slow. Finally, the authors made his suggest on improving the conditions of IPO and strengthen market supervision and some other aspects.Innovation of this paper are two:First, the study sample selected is newly established in China GEM stocks. Secondly, this paper synthetically research the profitability, growth ability and the financial liquidity of the company, comprehensively describe the change of these companies listed on GEM before and after IPO in all aspects. But this is still some defects as follow:As from opening of the GEM to author writing this article is very short, the selected sample time of GEM companies is between 2 years before IPO and 1 year after IPO, although we can find the GEM listed companies both growth ability and profitability have a drop in the conclusion, but only it means the situation is just short-term. If we want to know more about what the IPO brings to these company finally,we have to make a further research on it.