The Study On Post-issue Operating Performance Of The Listed Companies Of The Small And Medium-sized Enterprise Board

With the establishment and improvement of China’s market economy, small andmedium enterprise (SME) is continuing to grow and plays a vital role not only increating jobs and promoting national economic growth, but also in activating marketand motivating innovation. But financing difficulties is always one of the problems torestrict its development. The foundation of SME board provides a platform for smalland medium enterprises, which effectively mitigates the financial difficulties of SME.However, whether in foreign countries’ mature capital markets or China’s main boardmarket, there is a phenomenon that the performance of the firms would decline after thelisting, which is namely IPO effect. When the SME board sets up, it follows the samebasic system specification and standards with the main board market, for the small andmedium enterprise, which may lead to too high listing threshold. In order to achieve thecriteria for listing, the SME may conduct earnings management, which leaves hiddentrouble of performance decline after the listing.Inspired from the informed researches and the current situation of China’s SMEboard, this paper studies the performance changes before and after IPO of the firmslisted on SME board from the perspective of earnings management. The article selects11indexes from profitability, operational capacity, solvency and ability to develop tomeasure the performance of listed companies, using the Wilcoxon non-parametric testto analyze the performance change. The result shows that the companies’ profitability,capacity development and operational capacity of the total asset turnover, solvency ofthe asset-liability ratio dropped after the IPO; however labor efficiency and current ratioincreased after the IPO. At the same time in order to reduce the impact of macroeconomy, the paper empirically tests the performance changes yearly, which shows thesame result with the whole sample one. Following, using the modified cross-sectionaldata Jones Model, the paper estimates the degree of earnings management of the SMEboard listed companies during the process of IPO. And according to the degree ofearnings management, the samples are dividend into two groups to investigate therelationship between the earnings management and the performance changes. Theresults show that the listed companies of SME board conduct positive earningsmanagement in the two years before IPO, one year before IPO, the year of IPO and oneyear after IPO; the group with greater degree of earnings management, the performances of profitability and ability to develop decline more than the less greaterdegree one, while the performance changes of operational capacity and solvency are nodifference between the two groups.Finally, according to the research conclusion and the characteristics of thedevelopment of SME board, some suggestions are proposed: optimize the marketstructure of the SME board; improve the corporate governance structure; optimize themarket access mechanism.