Research On The Evaluation Of Financial Quality Of The SME Board Listed Companies

Financial Quality is that the companies’resources has been reasonable and effective configured tomeet the actual or potential needs of stakeholders. How to analyze and evaluate the financial qualityof listed companies, and prevent or avoid the policy mistakes leading to financial problems, is crucialfor both the listed companies themselves, and in terms of stakeholders. Relative to the main-boardmarket, SME-board listed companies are of high growth and profitability, but of smaller scale andshorter development time. And they are vulnerable to be interfered by some internal factors andexternal environments. So the evaluation of financial quality is quite difficult. Therefore, how toevaluate the financial quality of SME-board listed companies reasonably and effectively is a seriousand significant problem.This paper researches the financial quality of the SME-board listed companies from the view ofthe investors. In this paper, investors are special investors’concept, namely potential investors andsmall investors. From the perspective of investors in the present study of SME-board listed company,on the one hand, it can effectively protect the interests of investors to keep up their investmententhusiasm, and ensure adequate funding of capital markets. On the other hand, it allows listedcompanies to establish a correct business philosophy to strengthen its concept of creating value forshareholders, which can promote long-term healthy development of the capital market.In this article, through the contrast of the SME board and main board in earnings quality andgrowth quality, it finds that the main board listed companies’nonrecurring items have greaterfluctuations, and high proportion of profits. But the SME-board listed companies’profits come frommain operation revenue and the nonrecurring items have low proportion of profits. Also their threecosts have small variations. It belongs to endogenous growth. Therefore, when building a small andmedium-sized board listed company evaluation index system; this paper selected the direct indicatorsreflecting the profit, such as "operating profit growth","business gross profit margin", etc. In addition,because of the board’s growth depends heavily on its main business, and cash flow is still the key tothe development of small and medium plate, so operating cash flow index also appears to beespecially important. In constructing the indicator system, this paper added "every management cashflow growth" to better reflect the company’s financial quality. Based on the above consideration, thispaper constructed the indexes system based on the view of investors of the SME-board listedcompany.Combinations of the indexes system, in case analysis, in order to reduce the influence of thesubjective values, this paper uses the factor analysis to calculate on the2008-2010public disclosureof financial data of the SME board listed companies, and fatherly on the basis of factor scores to givea comprehensive analysis of the finance quality of corporate. Finally, from business managers,investors, market regulators, it gives targeted measures and puts forward recommendations on how toenhance the overall financial quality of the small board.